The US House Ways and Means Committee passed Congressman Adrian Smith’s (R-NE) bill, the Co-Op Consumer Protection Act, to provide relief from Obamacare penalties to taxpayers who lost their insurance coverage due to the failures of the Consumer Operated and Oriented Plans (co-ops) created under the President’s health care law.
Thank you, Mr. Chairman, for calling up my bill, the Co-Op Consumer Protection Act.
This is a short, simple bill with a basic premise – if you are a consumer who complied with the ACA’s individual mandate by purchasing health insurance through one of the Consumer Oriented and Operated Plans, or co-ops, created under the law, and your plan was terminated mid-year by the failure of that co-op, you shouldn’t be liable for the individual mandate for the remainder of that calendar year.
We have already had a hearing on what happened with the co-ops, so I won’t spend a lot of time rehashing that history. In short, $2.1 billion, largely in the form of startup and solvency loans, was distributed to approved co-ops. Now, 16 of the 23 co-ops which received $1.7 billion of those dollars have closed or are in the process of closing, with the remaining seven also struggling to remain solvent.
The first of these co-ops to close was CoOportunity Health, which provided plans covering 120,000 Nebraskans and Iowans in 2014 before being taken over by the Iowa Department of Insurance late that year. CoOportunity plans were wound down in the first quarter of 2015, and consumers were given an opportunity to select a new plan through the exchanges.
While health providers in Nebraska and Iowa were made whole for services provided to CoOportunity planholders through the states’ guaranty funds, consumers and the remaining insurers in the two states are now paying back the guaranty funds for those costs. Similar situations have played out in other states covered by collapsed co-ops, including states like New York and Illinois where planholders have lost coverage midyear.
When CoOportunity collapsed, I heard from nearly 300 constituents with concerns about what this change meant for them, including concerns about penalties for lapses in coverage, about having to cover deductibles twice in the same year, and about seniors very close to Medicare who were healthy and simply didn’t see the point in dealing with a brand new insurer for a short time before transitioning to Medicare.
I have previously shared the story of Pam Weldin, a constituent from Minatare in my district, who approached me because she had lost insurance three times in a little over a year. First the plan she had prior to the ACA, which covered her pre-existing condition, was cancelled. In its place she chose a plan from CoOportunity Health, which CoOportunity phased out after one year in an effort to remain solvent, and finally a second CoOportunity plan was terminated when the co-op was wound down entirely.
Another constituent, Melissa Lordemann of Hartington, wrote to me the day after Christmas in 2014 concerned that their CoOportunity plan was ending in early 2015 and that her family, including her child with medical needs, would find themselves paying a deductible twice or paying the individual mandate penalty for part of 2015, neither of which they could afford.
While both these situations were worked out with minimal disruption, it is only fair that we reduce the impact further for these families, and ensure that if any other co-ops close that families struggling to make an unexpected decision about health insurance midyear don’t have individual mandate penalties to worry about as well.
I know there are diverse views about the individual mandate on both sides of the aisle. This bill isn’t about that – it is about ensuring consumers aren’t caught in the crossfire – and I ask for your support. Thank you; I yield back.
H.R. 954, as amended, exempts taxpayers from the individual mandate for the remaining months within the calendar year in which their co-op insurance plan was cancelled. The bill applies retroactively to individuals who lost coverage after December 31, 2013, including those who lost plans sold by CoOportunity Health in Nebraska and Iowa. The Ways and Means Committee, on which Smith serves, is the committee of jurisdiction for H.R. 954.