The Obama administration  is moving to help struggling health cooperatives set up under the Affordable Care Act even as it seeks to recover federal funds from the failed ones.

The nonprofit co-ops were meant to offer health insurance to consumers on ACA marketplaces and to lower costs by giving established insurers more competition. But more than half of the 23 operating state co-ops have failed after receiving about $1.17 billion in federal loans.

Co-op officials have complained that the ACA has restricted their ability to acquire capital.

But Andy Slavitt, the acting director of the Centers for Medicare & Medicaid Services, has told Congress that administration  has ideas for helping co-ops to attract capital or merger partners.

The  Wall Street Journal reported that the Senate Finance Committee’s chairman, Sen. Orrin Hatch (R.-Utah), called the co-op program poorly designed and  said that it lacked adequate safeguards to protect taxpayer money. “He also questioned the co-ops accounting practices, specifically whether loans were recorded as assets.”

The WSJ reported that “Mr. Slavitt said three-quarters of consumers who were covered by co-ops that failed have now been able to maintain coverage through new plans. He also outlined steps being taken to help ensure the financial health of the surviving organizations, including a financial audit of the remaining co-ops after the end of the current open-enrollment period wraps up Jan. 31.”

The paper added:

“The agency will hold a March meeting with co-op leaders and others involved regarding a formula that spreads out risk among insurers. That program … distributes money from plans with healthier and younger enrollees to plans with sicker and older customers.”

“Co-op officials said the formula used to determine payments left them and smaller insurers at a financial disadvantage compared with larger insurers, and they have been pressing the Obama administration to make revisions they say are necessary to ensuring their survival going forward.”