More than half of the 23 taxpayer-funded Obamacare insurance startups are not offering plans next year, and another in Michigan said Tuesday that it was winding down.
Michigan’s Consumers Mutual Insurance announced late Tuesday it would not offer plans in 2016, making it the 12th Obamacare consumer-operated and oriented plan to close up. The closure comes two days into Obamacare’s third open enrollment period, and on the same day a congressional panel lashed out at an administration official about the spate of shutdowns.
The reason for the closure remains unclear. The co-op’s CEO told the Washington Post that the insurer will go through a wind-down plan that it hopes to finish by the end of this week.
Michigan’s co-op received a $71 million loan from the administration to fund its operations. In total, the 12 co-ops have received more than $1 billion in federal loans.
The administration gave out $2.4 billion in loans to all of the 23 co-ops, which were created by Obamacare to spur more competition on the exchanges.
A major reason that many co-ops gave for closing up was a lack of funding from a federal program intended to help mitigate substantial losses. Obamacare insurers asked for $2.9 billion from the program but only received $362 million.
Republican opponents have seized on the co-op failures, saying that the collapses are evidence that the law isn’t working.
The administration took heat from a subpanel of the Ways and Means Committee on Tuesday for the closures, which said they have wasted taxpayer money. An official with the Centers for Medicare and Medicaid Services, which oversees the co-ops, said the agency will work to recoup the loans.
The House Energy & Commerce Committee will hold a hearing on the co-ops on Thursday.
Administration officials have said that it understood some co-ops would fail as they are startups and only first came online back in 2014.
