Mandy Cohen, COO at the Centers for Medicare and Medicaid Services, has admitted that eight of the eleven surviving health care co-ops created under Obamacare might not make it to the end of the year.
Twenty-three co-ops were created under the Affordable Care Act but in short order 12 of them collapsed, including New York’s Health Republic co-op, the biggest of them all. That failure left taxpayers on the hook for some $355 million, according to Dan Weber, president of the Association of Mature American Citizens.
“The co-ops were originally touted as examples of the health care law’s early achievements. They were established as non-profit insurance companies that would provide competition in the commercial marketplace-the kind of competition that should have resulted in lower premiums across the board. It didn’t happen. As the Wall Street Journal pointed out, many of the co-ops exceeded their enrollment projections at first but then they failed because they were luring customers by low-balling premiums. You can’t sell a dollar’s worth of health insurance for 50 cents and expect to stay in business.”
Of course, those who purchased health care insurance from co-op providers, particularly the poorest among them, have been hurt the most, despite the claim that the ACA would make health insurance affordable. In the case of New York’s Health Republic, hundreds of thousands of policy holders were told on October 30th that they had just about a month to find a new provider at new rates.
“AMAC’s reporting of the Obamacare co-op debacle last fall predicted that the country, as a whole, would feel the impact of the collapse of the co-ops because taxpayers are picking up the tab. We also forecast that it would be those individuals and families most dependent on Obamacare for health care coverage that would be hit the hardest because the co-op failures are, at least in part, responsible for the spike in 2016 Obamacare premiums,” Weber noted.
2016 premiums are up at least 8% and the Congressional Budget Office is predicting that Obamacare premiums will increase steadily by about 6% or more a year over the next ten years. In addition, private sector insurance analysts believe that the elimination this year of two key Affordable Care Act components – the ACA’s risk corridors program and its reinsurance program – increases the potential for financial instability for insurers. It could result in a bigger spike in premiums in 2017.
The collapse of the co-ops further exposes the inadequacies and inefficiencies of the Affordable Care Act, according to Weber who noted that AMAC recently proposed what he calls a “common sense approach to truly affordable” health care coverage for all Americans.
“We call it the B.E.S.T. plan. The acronym stands for Bipartisan, Easy, Simple, Timely and it offers a functional, three-pronged approach to health coverage. It relies on a greatly expanded Health Savings Account program, the creation of a free coverage component for low income households and a modified Medicaid system.”