Tags: Slavitt | Obamacare | Co-Ops

Embattled Slavitt Must Finally Face the Music on Imploding Co-Ops

Embattled Slavitt Must Finally Face the Music on Imploding Co-Ops

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Wednesday, 20 January 2016 06:38 AM Current | Bio | Archive

 
Of all the many terrible ideas in Obamacare, and there are many, one in particular stands out for its looming potential to cause our country additional fiscal damage.

The Obamacare co-op system, a wannabe “public option” stuck into the law by liberals frustrated at their inability to include the full manifestation of their socialist vision, has been quietly burgeoning into a major financial liability for the taxpayer, and there is ample reason to believe the administration has planned all along for it to become “too big to fail.”

If the co-ops fail, it will be a devastating blow to those who support government-run health care.  
 
Enter Andy Slavitt, the embattled acting director of the Centers for Medicare and Medicaid Service (CMS) with a growing list of ethics questions that would make Jack Abramoff blush. Since he became acting director last year (the Senate has declined to confirm his nomination), Slavitt has moved doggedly to insulate the co-ops from political and financial pressure even as the losses and bankruptcies mount.

This started with CMS issuing repeated “start up” loans to failing co-ops, using money purportedly for new organizations to open up their doors to instead keep floundering ones from going under. It would seem that startup capital has become just another bailout fund.
 
Slavitt's latest ploy, which is admittedly clever in a devious sort of way, is to let the co-ops count those “loans,” i.e. bailouts, as assets on their balance sheets, getting regulators off their backs to perpetuate the charade for another little while. Given this, you may be less than surprised to learn that Slavitt's last job was as a senior executive at the company that built Healthcare.gov.
 
All of this is coming to a head because earlier this week, Sen. Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, announced an upcoming hearing in which Slavitt, the only scheduled witness, will be testifying about the disastrous co-op situation that has seen half of the 23 co-ops created under the 2010 health law shut by the end of 2015 despite $1.1 billion in federal “loans” that will never be returned to taxpayers. As Hatch noted, “Patients across the nation that were enrolled in these now-failed CO-OP insurance plans have been kicked off their plans and forced to shop for new insurance, only to find less choice.”
 
For instance, in February 2015 Iowa’s insurance regulator shut down the first of the co-ops, CoOportunity Health leaving 120,000 policy-holders in Nebraska and Iowa without coverage. In November, the demise of Health Republic of New York left 200,000 people in flux. New figures released just days ago from Colorado show tens of thousands of people who had received insurance from a now defunct co-op there remain without any health insurance at all. As one can imagine, this has caused significant disruption for large numbers of individuals holding the plans. 
 
Overall there are still $160 million in unpaid bills, prompting questions about who is supposed to pay for it all.
 
Beyond just the issue of the co-ops, the Finance Committee hearing could force Slavitt to answer uncomfortable questions about the unusual circumstances by which he came to be co-managing, without the Senate's advice and consent, roughly 1/12th of the economy.
 
Previously, Slavitt was the CEO of Optum/QSSI, the recipient of a $85 million contract for Healthcare.gov. Just after he announced he was heading to work for Obama, however, the company unexpectedly turned down an extension to its contract worth tens of millions of dollars, which industry analysts attributed to an effort to pave an easier path to Slavitt's Senate confirmation to CMS director.

The fact that a company would turn down tens of millions of dollars in revenue to help an employee who no longer works there does not, on its face make a lot of sense. It's only when you factor in the revolving door and crony capitalism at work in the bidding process that the company's motives become clear.

In that sense, the company was potentially thinking Slavitt's stint working for Obama could be far more valuable to it. If true, this also helps explain a cozy deal arranged for Slavitt on his exit from the company, in which he received $4.8 million in entirely tax-free cash by way of a little-known loophole in government hiring practices.
 
All of these happenings explain why it is finally time for Mr. Slavitt to face the music before Chairman Hatch on Jan. 21. Most observers are expecting quite a show, as far as congressional hearings go, given Slavitt's steadfast, almost inexplicable loyalty to the co-ops in the face of dramatic evidence they are a failure.

Christopher (Chris) Versace is the editor of the newsletter The Growth & Dividend Report and is a featured columnist to The Street.com as well as a contributor to FoxBusiness.com and Forbes.com. To read more of his blogs, CLICK HERE NOW.

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Of all the many terrible ideas in Obamacare, and there are many, one in particular stands out for its looming potential to cause our country additional fiscal damage.
Slavitt, Obamacare, Co-Ops
812
2016-38-20
Wednesday, 20 January 2016 06:38 AM
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