(WASHINGTON, D.C.) – Republicans in the Senate and House today questioned whether a Health and Human Services’ (HHS) $3.4 billion loan program to create non-profit health insurers would result in the greater competition and lower costs. In a letter to HHS Secretary Kathleen Sebelius, the members noted that the Department’s own actuarial estimates suggest at least $1 billion in taxpayer dollars may inevitably be wasted.
The letter was signed by Senator Tom Coburn (R-Okla.), Member of the Senate Finance Committee, Senator Mike Enzi (R-Wyo.), Ranking Member on the Senate Health, Education, Labor and Pensions Committee, Senator Orrin Hatch (R-Utah), Ranking Member on the Senate Finance Committee, Rep. Denny Rehberg (R-Mont.), Chairman of the House Appropriations Subcommittee funding HHS, and Rep. Charles Boustany (R-La.), Member of the House Ways and Means Committee.
“HHS may be seriously underestimating the financial risk that these new entities pose to the Federal Treasury,” the members wrote. “Recent reports have highlighted the challenges facing CO-OPs, which strongly suggests that the program will fail to provide consumers with promised viable alternatives or reduced costs. The new health care law is unfortunately already exacerbating this problem. As a result, many individuals and small businesses are confronting the reality of fewer choices and higher costs when purchasing health insurance.”
Given prior failures in government lending, including huge loans to now bankrupt Solyndra, the members requested responses to a number of questions, including that the Department correctly assess both the measures it has established to protect taxpayer funds and the process by which HHS has awarded the CO-OP loans. Earlier this year, Senator Coburn highlighted the problems with CO-Ops in a report, Warning: Side Effects, warning that they could be the Solyndra of the President’s health care law and waste millions of taxpayer dollars.
To read the full text of the letter, click here.
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The response from HHS