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ObamaCare Co-Ops Aren’t Working As Planned, Leaving Taxpayers On The Hook For Nearly $1 Billion

- February 27, 2014

ObamaCare’s Federally Funded “So-Called Public Option” Alternative Has Struggled To Enroll People And Offer Affordable Coverage. “The co-ops were a late addition to the Affordable Care Act, proposed as an alternative to the so-called public option, a plan that would have been offered directly by the federal government and that was met with political resistance. The idea was to offer consumers more choice in areas then dominated by just one or two insurers. The co-ops received federal loans, and must be largely governed by their members.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

  • According To The National Alliance Of State Health Co-Ops, Only 300,000 People Have Enrolled In The Co-Ops. “Figures released by the Obama administration on Tuesday show that about four million people have signed up for health care coverage in the state and federal exchanges. About 300,000 have chosen a co-op, according to John Morrison, the former president of the National Alliance of State Health Co-Ops.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

“Many Insurers And Industry Experts Say That Simple Market Forces, Like Price, Are The Main Factors Determining The Co-Ops’ Success So Far.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

In Connecticut, “The Co-Op Charged As Much As 29 Percent More Than Rivals.” “In Maine, for example, the co-op is offering the cheapest plans in nearly every category, while in Connecticut, the co-op charged as much as 29 percent more than rivals.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

  • Connecticut’s ObamaCare Co-Op Has Only Attracted 1,700 Customers. “But so far, few in Connecticut are listening. Just 1,700 customers have signed up for plans through the co-op, about 3 percent of those who have bought coverage in the state’s new insurance marketplace, where other carriers, Anthem and ConnectiCare, have outpaced it.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

The Michigan And Illinois Co-Ops Have Also Failed To Offer Low Priced Plans And Are Struggling With Enrollment. “The story is the same in Michigan and Illinois, where the co-ops failed to offer low prices compared with other insurers and are struggling with low enrollment.” (Reed Abelson and Jo Craven McGinty, “Health Law’s Co-Ops Have Mixed Success So Far,” The New York Times, 2/27/14)

ObamaCare’s Co-Ops Have Struggled To Stay Afloat As Taxpayers Are Left On The Hook

At The Time Of ObamaCare’s Launch In October 2013, A Federal Audit Found That A Co-Op Had Closed, Another Was Struggling To Stay Afloat, And At Least 9 Were Expected To Run Into Financial Problems. “While the debut of the Affordable Care Act this month has been marred by widespread computer problems, the difficulties the co-ops face have been less obvious to consumers. One co-op, however, has closed, another is struggling, and at least nine more have been projected to have financial problems, according to internal government reviews and a federal audit.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

The Failure Of Those Co-Ops Could Cost Taxpayers Nearly A $1 Billion And Leave Customers On The Hook For Medical Bills. “Their failure would leave taxpayers potentially on the hook for nearly $1 billion in defaulted loans and rob the marketplace of the kind of competition they were supposed to create. And if they become insolvent, policyholders in at least half the states where the co-ops operate could be stuck with medical bills.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

According To An Internal Application Review, Maryland’s Co-Op Is One Of Three Co-Ops Expected To Run Into Financial Problems. “The Maryland outfit is one of at least three co-ops forecast to have financial problems in internal application reviews by Deloitte, a contractor for the Department of Health and Human Services.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

“New York’s Co-Op Had Overly High Debt … While New Jersey’s Co-Op Was Projected To Have Expenses Grow Faster Than Revenue.” “The reviews also found that New York’s co-op had overly high debt and may have been overstating assets, while New Jersey’s co-op was projected to have expenses grow faster than revenue, ‘a negative indicator of the co-op’s ability to remain financially solvent.’’’ (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

Last July, The Inspector General For Health And Human Services Found That Expenditures For 11 Co-Ops Blew Through Their Start-Up Funding. “In July, an HHS inspector-general audit found that 11 co-ops had projected start-up expenditures that exceeded their start-up funding — and that there was ‘little evidence’ of critical private support for 16 co-ops.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

  • Vermont’s Co-Op Was Denied A Licensure, Leaving Taxpayers On The Hook For $4.5 Million. “In Vermont, the state denied the co-op a license in a scathing report that said it would lose millions of dollars. HHS terminated the co-op’s $33.8 million in loans last month, forcing it to dissolve. Christine Oliver, the co-op’s former chief executive, said it will be unable to repay $4.5 million that had been spent.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)

“The Obama Administration Has Estimated That More Than A Third Of The Nearly $2 Billion It Has Lent To Co-Ops Will Not Be Repaid.” (Jerry Markon, “Health Co-Ops, Created To Foster Competition And Lower Insurance Costs, Are In Danger,” The Washington Post, 10/22/13)


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