Seems like only yesterday we were reporting the fifth state level health insurance co-op closing in Kentucky. Since Thursday, the co-op closure toll has jumped to eight.
Twenty-three tax-payer funded co-ops were created under Obamacare.
Last year, Forbes Opinion Editor Avik Roy testified before Congress saying, “there are fundamental flaws in the way the co-op program was designed.”
With eight co-ops announcing they’ll be closing up shop by year end and more closures looming, Roy’s year-and-a-half-old testimony is particularly haunting:
“Co-ops were introduced as a substitute for the so called “public option” by Senator Kent Conrad. The idea was that co-op plans, shorn of the profit motive, would offer lower premiums than traditional insurers.Failure of the co-op program could cost taxpayers as much as $2 billion. In addition, failure could expose hundreds of thousands of co-op enrollees to unpaid medical bills.The argument that co-ops will succeed because they’re non-profit ignores the fact that non-profit insurers are already widespread in the United States.”
By the end of 2014, 21 of the 23 non-profit health insurance co-ops created under the ACA were losing money. Enrollment was well beneath expectations in 13 of the 23 plans. Less than a year later, one third have closed.
The Wall Street Journal attributed the lack of federal funding to state level non-profit co-ops to the hard work of Congressional Republicans who through budget negotiations, were able to whittle the administration’s $10 billion bailout bid down to about $2.4 billion. Slim federal pickings have left co-ops starved for cash and unable to meet the demands of their enrollees.
Last week, Tennessee, Kentucky, Colorado, and most recently Oregon, announced co-op closures.
As Kristina Ribali pointed out at HotAir, Colorado’s co-op was assuring enrollees they had cash aplenty less than 24 hours before state regulators forced Colorado HealthOP to shutdown due financial insecurity. As a result, 80,000 Coloradans will lose their health insurance plans.
Friday, Health Republic Insurance, one of two co-ops in Oregon announced it too will be closing, making it the eighth to do so. Robert King at the Washington Examiner writes:
The co-op said Friday it priced its plans expecting to receive money from the federal government under its risk corridor program. That program was created under Obamacare to pay marketplace insurers for providing coverage for more older, sicker Americans.Insurers requested more than $2 billion in payments but the government provided only $362 million.The shortfall for Oregon placed the co-op in a “difficult financial position,” it said.The effect of that shortfall is being felt now as several other co-ops have announced their closure for the same reason.The co-op program was created to offer more competition for Obamacare enrollees.Oregon’s co-op served nearly 15,000 members, and will still give coverage through the end of the year.
Democratic Presidential frontrunner Hillary Clinton said if elected, she would keep Obamacare with few modifications, though there’s much speculation her proposed changes to President Obama’s signature law would cause health care and insurance costs to skyrocket.
If we wait long enough, she might change her mind about that too.
Meanwhile:
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