A little-known Obamacare program intended to create competition on the exchanges is falling short, leading a Republican senator to ask a federal agency why it is still devoting funding and manpower to it.
The Affordable Care Act created the Multi-State Plan Program to drive competition on the law’s exchanges, but only one state — Arkansas — is participating in the program next year. Sen. Ron Johnson, R-Wis., said he is concerned about wasting the manpower of 42 federal employees on the program, which gets $10 million a year.
“It has utterly failed, so let's just put a stake in it, save the money and put the human resources to better use,” Johnson told the Washington Examiner.
He wrote in a Nov. 6 letter to OPM that the agency asked for more funding for the program, which appears to be a "drain on OPM's finite resources." The Senate Homeland Security and Governmental Affairs Committee, which Johnson is chairman of, oversees OPM.
The criticism from Johnson, who co-sponsored a last-ditch effort to repeal Obamacare that faltered in September, comes as another program intended to create competition on Obamacare’s exchanges by creating smaller insurers called consumer oriented and operated plans failed after 19 of the 23 co-ops shuttered.
The law tasked the Office of Personnel Management with running the multi-state program because it runs the federal employee insurance program. Anyone can buy a multi-state plan on Obamacare’s exchanges, which are on the individual insurance market used by people who don’t get insurance from a job or the government.
OPM was supposed to contract with private insurers in every state to offer affordable health plans in that state's Obamacare exchange. The agency must review and approve any application from an insurer to participate in the program and it must monitor the plans’ market performance and their compliance with the law.
The plans must meet Obamacare regulations such as the coverage of essential health benefits like maternity care and mental health.
But Johnson wrote in a Nov. 6 letter to OPM that the program has not lived up to the lofty expectations set by the Obama administration.
The administration told insurers initially that “each national plan would have 750,000 people enrolled in the first year,” according to a 2013 story in the New York Times.
During Obamacare’s first open enrollment in 2014, OPM contracted with Blue Cross Blue Shield Association to offer more than 150 plans in 31 states and the District of Columbia. But only 370,000 people enrolled in them.
Johnson said the number of states participating in the program dwindled, a microcosm of other major insurer defections in Obamacare. Aetna and UnitedHealth have left the exchanges because of mounting financial losses caused partly by not enough younger and healthier people signing up for Obamacare.
In 2017, the number of states participating in the multi-state program dropped to 22 with 300,000 total enrollees.
Arkansas is the only state participating in the program next year, Johnson wrote.
“The fact that this ‘multi-state’ program is only being offered in a single state is a telling sign that this program has failed to meet its expectations,” Johnson said in the letter. “Despite its failure to meet its objectives, OPM still employs 42 people in the MSP program and receives approximately $10 million annually in appropriations.”
Johnson said he hasn’t heard back from OPM. The agency did not return a request for comment.
Johnson’s criticisms come during Obamacare open enrollment for the 2018 coverage year.
The multi-state program isn’t the only one designed to spur competition on the exchanges. Obamacare also created the co-ops, but those have mostly failed, too, experiencing problems similar to those faced by major insurers, namely a sicker-than-expected risk pool caused partly by not enough younger people signing up.
Another problem has been the co-ops didn’t receive enough funding from the federal government to offset their losses under a program called risk corridors. The program was expected to offset major losses from insurers but hasn’t had enough funding.