One-third of the Obamacare health insurance co-ops have now failed, causing about 400,000 policyholders in 10 states to scramble for new coverage for 2016.
Seven of the 23 co-ops created by the Affordable Care Act in 2011 at a cost of $2.4 billion — including many launched by passionate but inexperienced health reform activists — have since closed their doors. An eighth, the Colorado Health Insurance Cooperative, appears on the brink of default as well.
The failing Obamacare co-ops have canceled health insurance for largely poor and low-income customers in Iowa, Nebraska, Kentucky, West Virginia, Louisiana, Nevada, Tennessee, Vermont, New York and Colorado.
The co-ops are falling like dominoes. In the last two months, the public has seen co-ops fail in Nevada, Louisiana, Tennessee, Kentucky and New York.
Including Colorado, taxpayers have lost $876 million in loan money that was supposed to last for 15 years. The failed co-op’s existed for only two years before suddenly closing their doors.
More co-op failures are expected. “There will be more closures,” said American Enterprise Institute resident fellow Thomas Miller, a health care expert. “The only question is when rather than whether.”
The Center for Medicare and Medicaid Services, which funded the co-ops, said this summer that six co-ops were under “enhanced oversight” because of poor financial reports. The Daily Caller reported in August that federal officials refused to identify the six that are in trouble.
The Inspector General of the U.S. Department of Health and Human Services reported in July that 21 of 23 operating co-ops faced staggering losses, some greater than the loans that were expected to last 15 years.
New York’s Health Republic, the largest of the co-ops, announced it was closing its doors last month, leaving 155,000 customers in the lurch. The New York failure was not only the largest, but was the flagship of the co-op movement. It was created by liberal political activist Sarah Horowitz, who had previously worked with then-state Sen. Barack Obama.
The New York Department of Finance Services last month reported that Health Republic had the worst 2014 consumer record of all insurance companies operating in the state.
Horowitz was the only individual to be given federal loans to run three co-ops at the same time. Her other two co-ops are in New Jersey and Oregon.
Miller said there is growing apprehension among state insurance commissioners about the solvency of many of the other co-ops still hanging on.
Nov. 1 is the new date for open enrollment for the co-ops. The deadline is forcing state insurance commissioners to take a closer look at the co-0ps’ prospects over the next year.
This report, by Richard Pollock, was cross-posted by arrangement with the Daily Caller News Foundation.