mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
ACA Fail Fractal
Obamacare Co-Ops Looking Like Solyndra?

Last winter, CoOpportunity Health, one of the 23 health care co-ops created by the ACA, went under after it could no longer afford to pay for the care of its customers, who turned out to be sicker than the co-op expected them to be. The co-op was one of the only insurers offering ACA plans in Iowa, and its collapse was a victory for big insurers. In the wake of its demise, it remains uncertain whether the company will be able to pay back federal loans of $147 million.

It now appears that CoOpportunity Health is not alone in the predicament it found itself. In case you missed it, the New York Times recently picked up on an audit released last month of the 23 co-ops created under the law. The story does not paint a pretty picture: 22 out of 23 co-ops lost money last year, and many could find it hard to repay the 2.4 billion that the federal government spent overall on the co-ops.

The story notes that not all the news is bad: Some of the co-ops are doing better than others, and some quoted by the Times predict that the co-ops’ financial situations will improve over time. Even there, however, the news is mixed, for one way some of these co-ops may become solvent, and thus able to pay back their federal loans, is by raising premiums:

The Kentucky plan lost $50 million last year, more than any other insurance co-op, as it paid out $1.25 in claims for every dollar it collected in premiums.

“We attracted many consumers with serious illnesses,” Ms. Dunlap said. “One of our most popular plans had low premiums, low out-of-pocket costs and a large network of providers. It’s difficult, it’s uphill, but we are energetic and hopeful. Trends are going in the right direction.”

The Kentucky insurance commissioner recently approved rate increases averaging 25 percent for the Kentucky Health Cooperative in 2016. The co-op said the additional revenue would help reduce its losses.

In the case of CoOpportunity Health, the failed company may be able to use other federal money due to it through the risk corridor program to discharge some of its liabilities. But if it will take big premium hikes to enable some of the co-ops to repay their federal loans, that’s the kind of cure that is worse than the disease.

Features Icon
show comments
  • Kevin

    Who knew that “low premiums, low out-of-pocket costs and a large network of providers” was not the path to solvency for an insurer?

    If “additional revenue” will only “help reduce its losses” there’s a problem.

    Who’s the actuary who certified these plans?

  • MoIIy_Pitcher

    Obama and the Democrats made it a requirement of lawful citizenship that all people enter into debt for life with an insurance company.
    Kentucky lays the groundwork for premium increases for mandatory insurance averaging 25 percent.
    …And the insurance companies say trends are going in the right direction.

    Imagine that.

  • Del_Varner

    And what were the salaries of the top administrators of these coops?

  • Fifty Ville

    A truism of socialized medicine: There’s always too much demand and too few resources.

  • megapotamus

    I could insure anyone, for any risk, at any rate…. and make a tidy profit!… if only I control the deductible. That is where the truncheon meets the cranium, fellow babies! They always knew it. Did Obama? Seems not. It truly does seem not. Forward.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service