Tennessee’s Obamacare co-op yesterday announced it would shut down. It now becomes the sixth co-op that has failed in the nation this year, and more could be coming. These failures have left taxpayers on the hook for $762 million in loans and solvency funding that was provided to these co-ops by the Centers for Medicare and Medicaid Services (CMS).

While alarm bells have been ringing for months, CMS has continually slow-walked the release of information. With millions more in taxpayer funds likely at risk, CMS and acting administrator Andy Slavitt must be held accountable for the Obamacare co-op failure.  

When it was passed, Obamacare created the Consumer Operated and Oriented Plan (co-op) program which would provide funding for the creation of “member-driven” providers of healthcare insurance that would not answer to shareholders. For this purpose, CMS has loaned over $2.3 billion to 23 co-ops across the country.

These loans have already left taxpayers with losses of $762 million. Along with Tennessee, co-ops in Nevada, New York, Kentucky, Louisiana and Iowa/Nebraska have failed.

Failed co-ops have now displaced 430,000 individuals who received health insurance through them.

Earlier this year, a report by the Health and Human Services Inspector General (HHS OIG) raised concerns about the long-term survivability of the co-op program, noting that 21 of 23 had incurred net losses. While these concerns led CMS to place six co-ops on “enhanced oversight” the agency refused to divulge which ones were failing. In addition, HHS OIG noted that “CMS had not established guidance or criteria to assess whether a co-op was viable or sustainable.”

After the New York co-op — the largest in the nation — failed late last month, CMS admitted that more will soon fail. Despite this acknowledgement, it remains unclear what CMS and its acting administrator Andy Slavitt are doing to ensure taxpayer dollars are protected.

Since Slavitt started as acting administrator in May 2014, CMS provided countless solvency loans to co-ops including now failed co-ops. Iowa/Nebraska received $32.7 million and New York received $90 million on September 2014, while Kentucky received $65 million on November 2014. A year later, these co-ops have all declared they will no longer remain operational.

After serving as acting administrator of CMS since May 2014, Slavitt has been nominated to lead the agency on a permanent basis. The agency’s handling of Obamacare co-ops in that time does not inspire confidence, and tough questions should be asked about his ability to safeguard taxpayer dollars.

A list of failed co-ops and their cost to taxpayers is below.


Total CMS Loans


 $          65,925,396

New York

 $        265,133,000


 $        145,312,100


 $        146,494,772


 $          73,306,700


 $          65,790,660


 $        761,962,628