Sixteen Obamacare co-ops have now failed. Illinois announced that Land of Lincoln Health, a taxpayer funded Obamacare co-op, would close its doors, leaving 49,000 without insurance. The co-op now joins a list of 15 other Obamacare co-ops that have collapsed since Obamacare’s implementation. Failed co-ops have thus far cost taxpayers more than $1.7 billion in funds that may never be recovered.
Co-ops were promoted as not-for-profit alternatives to traditional insurance companies created under Obamacare. The Centers for Medicare and Medicaid Services (CMS) financed co-ops with startup and solvency loans, totaling more than $2.4 billion in taxpayer dollars. They have failed to become sustainable with many collapsing amid the failure of Obamacare exchanges.
Connecticut’s financially “unstable” Obamacare health-insurance co-op was placed under state supervision on Tuesday, as regulators said 40,000 people covered by the company will ultimately have to find new plans for the coming year.
HealthyCT is the 14th of 23 Oba,acare co-ops to fail since they began selling health plans on government-run Affordable Care Act insurance exchanges. Several of the other remaining co-ops, at least, are believed to be on shaky financial ground.
Eight of the 11 remaining Obamacare health insurance co-ops appear likely to fail this year, according to an analysis of financial documents obtained by The Daily Caller News Foundation.
Twelve of the original 23 federally-financed co-ops have already collapsed. The co-op program was funded with $2.5 billion in 2010.
A Department of Health and Human Service’s inspector general audit report revealed that 22 of 23 ObamaCare co-ops operated under a net loss in 2014, with more than half of them also missing their enrollment quotas by large margins.
The co-ops were created under Obamacare as nonprofit insurance companies injected into the marketplace to stir competition in areas where few insurance options existed. The plan is not really consumer oriented, as it relies on something akin to market manipulation by the government to artificially foster a competitive market where none existed. This is all held up with taxpayer money.
ACA co-ops were initially funded in 2011, and began with some $2 billion under the then new healthcare law. This beginning marked a venture into experimentation, at least as a way “to provide tax-paid competition to private sector health insurance providers.”
Now according to a recent story in The Daily Caller (online, 6/30) by Richard Pollock, “Taxpayer-funded Obamacare health insurance co-ops may be running afoul of the law by giving extravagant paychecks to their top executives.” This is according to an investigation conducted by the Daily Caller itself.
In March 2014, “advisory board members” met in Washington, D.C. and expressed concern about “unjust enrichment,” according to Pollack’s article.
18 of 23 co-ops have paid their top execs salaries ranging from: $263,000 to $587,000.
Obamacare Doubting Thomases may wish to reconsider their wishful premonitions for an ACA implosion. In Maine, for example, the insurer catching the most health insurance applicants is not the state’s Blue Cross Blue Shield plan (held by WellPoint Inc.) it’s actually Maine Community Health Options: a start-up that wasn’t around as recently as three years ago. This new healthcare kid on the block is largely taxpayer funded; it’s money loaned under the auspices of the U.S. healthcare law. The start-up has garnered approximately 80 percent of the health insurance market so far in Maine’s new insurance exchange. This scenario is exceeding its own projections, according to chief executive officer, Kevin Lewis.
The 2010 Patient Protection and Affordable Care Act refers to these new start-ups as “Consumer Operated and Oriented Plans.”
Performance by healthcare co-ops, in several states, remains mixed. In Connecticut, HealthyCT whose offices exude as much energy as a start-up company, found Connecticut residents are collectively yawning at attempts to have them join the non-profit cooperative. Only 1,700 customers have signed on. Approximately 3 percent of those purchasing insurance through the state’s new marketplace did so from competitors. Carriers like Anthem and Connecticare are outpacing HealthyCT. Federal lawmakers were hoping for much better, back when they added a provision in the ACA setting up some 23 nonprofit cooperatives. The purpose was to shake up the insurance market. Conversely, in Maine, Maine Community Health options has garnered most of the enrollment in that state, actually outpacing Anthem, its leading competitor. Anthem is a subsidiary of one of the nation’s leading insurers, WellPoint.
Co-ops were a last minute addition to Obamacare, and were offered as an alternative to the Public Option, a plan which would have been offered by the feds. The Public Option has faced a great deal of political opposition. Both insurers and industry experts believe market currents, like price, determine a coops success.