8 of the 11 remaining Obamacare co-ops set to fail this year
I remember the first time I heard the term "co-op." It was in connection with the hippie communes of the late 1960s and usually referred to ways to share food production.
There is nothing intrinsically wrong with co-ops, as long as there is a rational basis for forming them. In the case of Obamacare insurance co-ops, we have seen the epic failure of an idea that never should have been tried in the first place.
The Obamacare co-ops are tax-funded non-profit entities that were supposed to compete with private insurance companies. In this, they have failed spectacularly. In the last couple of years, 12 of the co-ops have shut their doors, costing doctors and hospitals million of dollars in losses. This year, some experts are predicting that up to 8 of the 11 remaining co-ops will go under as well.
"In general, there’s not a turnaround in sight. The same problems that plagued them before are continuing,” Thomas P. Miller, senior fellow at the American Enterprise Institute who previously served as the senior health economist for the congressional Joint Economic Committee, told TheDCNF.
Obamacare advocates hoped the tax-funded non-profit co-ops would successfully compete with for-profit commercial insurance companies and drive down healthcare costs and eventually become permanent fixtures in the marketplace.
State insurance regulators are already liquidating in the 12 states where the co-ops already have closed their doors.
In some states like New York, hospitals and doctors are facing hundreds of millions in losses that will not be covered by the assets of the failed co-op, Health Republic of New York.
Data compiled by TheDCNF based on the co-op 2015 annual reports suggest eight are likely to default and only four of them will be in business by year’s end.
The co-op documents obtained by TheDCNF were annual reports filed before state insurance regulators. The reports must accurately depict the financial health of the co-ops and are current through the end of calendar year 2015. The annual reports became available to the public in mid-March.
The Department of Financial Services of New York is also conducting an official investigation into Health Republic, alleging the co-op did not accurately describe its financial condition to regulators.
Earlier this year, Mandy Cohen, a top official at the Centers for Medicare and Medicaid Services (CMS), told Congress eight co-ops are facing special scrutiny because of their poor financial statuses.
She said an “enhanced oversight” program is in place for some troubled co-ops and others are operating under a federally imposed “corrective action plan.”
The bottom line was that the co-ops were grossly underfunded to begin with, and their business models were wildly optimistic. In other words, they were operating on wishful thinking.
We should have taken that $2.5 billion and used it as fuel to build fires to heat the houses of the poor. At least then the money would have been put to use rather than poured down the black hole of Obamacare.