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.