Tax-funded Obamacare Co-ops Paid K Street Lobbyists To Get More Federal Cash
Health Republic of New York paid K Street lobbyists to help it secure $90 million in federal “solvency funds” to allow the Obamacare health insurance co-op had to stay afloat last year, according to congressional lobbying disclosure records.
It’s illegal for federal funds recipients to try to influence Congress or federal officials government.
Health Republic of New York received $265 million in start-up funding in 2012, making it the largest of two dozen health insurance co-ops established under an Obamacare program designed to provide competition to private health insurance firms.
Obamacare health insurance co-ops in Colorado and Michigan also retained lobbyists to influence Congress and federal officials, according to the documents available in the U.S. Senate clerk’s office.
The documents show Health Republic, paid $180,000 to Alston & Bird from 2014 through the first quarter of this year.
Heading up Health Republic’s Washington lobbying is former U.S. Rep. Earl Pomeroy, a nine-term North Dakota Democrat, who run’s the K Street firm’s health care lobby shop.
Bob Siggins, a former long-time congressional staff aide for Pomeroy, also works for the firm and represents Health Republic.
Federal law forbids a recipient of federal funds “to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any federal action.”
Obamacare co-ops like Health Republic rely almost exclusively on tax dollars. The U.S. Centers for Medicare and Medicaid Services awarded $2 billion to 24 proposed co-ops in 2012. The money was to be used for administrative start-up costs and insurance capital.
“If they rely 100% on federal taxpayer dollars, they are prohibited from using those funds to lobby agencies or members of Congress,” said Scott Amey, general counsel of the Project on Government Oversight, a non-profit government watchdog. “Lobbying cannot be paid for with taxpayer dollars.”
Pomeroy told the Daily Caller News Foundation’s Investigative Group that his lobbying on behalf of the federally funded co-op was “completely appropriate” and said they would continue the work.
When the non-profit co-ops were created under Obamacare, health care activists hoped they would successfully compete with commercial insurers.
But many of the co-ops have compiled less-than-stellar records, as was predicted by the White House Office of Management and Budget, which predicted that nearly half of the groups would fail.
The insurance commissioner in Vermont refused to license the Obamacare co-op there in 2013. And the Iowa-Nebraska co-op was dissolved under state receivership early this year.
Health Republic has claimed to be among the most successful Obamacare co-ops, capturing one-third of New York’s Obamacare exchange customers.
The co-op was founded by Sara Horowitz, a well-known liberal New York political activist who once worked with then-state senator Barack Obama at a New York think tank funded by billionaire George Soros.
Horowitz also was the only individual to be given federal approval to launch three health insurance co-ops in three separate states. CMS eventually awarded her $434 million to operate co-ops in New York, New Jersey and Oregon.
Despite the substantial federal funding, Health Republic executives discovered last year that they did not have enough capital on hand to meet New York’s capital reserve requirements.
Alston & Bird’s disclosure forms describe the firm’s lobbying of Congress and CMS on behalf of Health Republic for the solvency funds. CMS awarded them $91 million last September.
According to CMS officials, a request for solvency funds represents a co-op’s attempt to meet “state determined reserve requirements.”
If a co-op’s capital reserves are being depleted too quickly or fall rapidly to unacceptable levels set by insurance regulators, there may be a need for a rush of new “solvency” funds.
It is unclear what went wrong at Health Republic last year. However, Horowitz ran another non-profit health insurance company in New York called Freelancers Insurance, which she closed down in 2014.
In 2013, the last full year of its operation, the New York Department of Financial Services ranked Freelancers as one of the poorest insurers in the state, ranking 31st among 34 insurers in the number of complaints received by state officials. Horowitz’s Freelancers also had the highest reversal rate for grievances filed by doctors, hospitals and other medical providers.
Thomas Miller, a health expert and resident fellow at the American Enterprise Institute said Health Republic’s decision to hire a high-priced lobbying firm indicates “they were pulling out all of the stops.”
The request for solvency funds is “a warning sign not only that they’re having trouble right now but it’s a preview of what would be a continuing chronic future.” He said, “they’re simply throwing more good money after bad.”
Consumer Mutual Insurance of Michigan reported paying $13,000 in lobbying fees to MJ Capitol Consulting. The Michigan co-op received $71 million in CMS funding and also sought solvency funding but did not get it.
The Colorado Health Insurance Cooperative received $72 million from CMS and paid $20,000 this year to Thorn Run Partners for unspecified lobbying on “issues relating to CO-OPs.”
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