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ACA Fail Fractal
ACA Co-Op Watch: Another One Bites the Dust

Another co-op created by the Affordable Care Act is going under—this time in New York. Health Republic Insurance of New York will join the three other ACA co-ops that have so far gone out of business. It’s a familiar story: The co-op offered some of the best premiums in New York, and those low rates meant that it did not take in enough money to cover the claims it had to pay out. More, via Politico New York:

The insurer’s low premiums attracted roughly 20 percent of the New York market, but the company never had the reserves to cover all those members. From the beginning, many industry insiders wondered whether its offerings were too generous […]

The company also failed to estimate just how much it would cost to cover members in upstate New York, where residents are historically less healthy than those nearer to New York City. Board members’ desire for statewide coverage proved too ambitious and costly, and earlier this year, Health Republic announced it was pulling out of upstate New York, unable to provide coverage there without substantially raising premiums.

These co-ops were supposed to be a triumph of social and financial engineering, ornaments of the sparkling new health care system Obamacare advocates thought we were getting. The reality: Not only in New York, but elsewhere too, high costs are dragging them down.

The poor state of these co-ops is not a sign that health care reform isn’t necessary. It is. Nor is it a sign that too many ordinary Americans don’t need a better national health care policy that helps them meet their health care needs. They do. And it’s not a sign, either, that everything in Obamacare is bad. It isn’t.

But it is one of many signs pointing to an increasingly undeniable reality: Obamacare isn’t the answer to America’s health care problem. The law involves too much wishful thinking, too many giveaways to powerful interests, too much political grandstanding, and too little attention to the underlying forces driving health care costs through the roof. We desperately need a better heath care in this country, but we will have to look elsewhere for policies that will help us build a better system.

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  • Government Drone

    Cue the editorials & political speeches for single-payer, in order to “save” all this. Medicaid is going to be the big model.
    Of course, with most doctors pretty much boycotting Medicaid patients over low reimbursement rates, this won’t last too long till we go to single-provider, & soon Mexico will be home to some of the best (& best-paid) physicians in North America.

    Of course, Cuba will be set up real nice for that role, too; cheaper than Mexico & less (so far) violent crime. It’ll also have good press with the Hollywood crowd, who will think they’re supporting socialized medicine by going there.

    • Blackbeard

      Exactly. This was never supposed to work it was supposed to prepare the ground for single payer. Everything is working as intended.

  • Andrew Allison

    Much as I despise ACA, blaming it for the stupid business decisions of the co-ops seems a bit unfair. It appears that the people setting them up didn’t have a clue about underwriting.

    • rheddles

      Andrew, Really? How many of these co-ops were operating profitably before ACA and how many were set up after the passage of ACA so that they could “care for the members”? It was a model that would never work and only the supremely naive unicorn enthusiasts believed it could. This generation’s Jonestown.

      • Andrew Allison

        None, and all of them. My point was that the failures are a result of the fact that they were set up by supremely naive unicorn enthusiasts, not the Abominable Care Act.

        • qet

          These are the same thing. The ACA itself is nothing but a gigantic exercise in unicornism.

          • Andrew Allison

            I beg to differ. IMO is a massive wealth transfer scheme, from taxpayers to insurance and healthcare providers.

          • qet

            Sure. It’s a plain old horse all right. But it was dressed and presented to the people, and was fawned over by them and is still being defended to the death by them, as a unicorn.

  • MartyH

    From their website:

    “At Health Republic, we are for people, not profit. We answer to members, not shareholders.”

    The logical conclusion of this attitude is also on their website:

    “Health Republic will begin winding down operations effective 9/25/2015.”

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