After 20 of the 24 Obamacare non-profit health insurance cooperatives collapsed despite the influx of $2.4 billion in taxpayer funds, it shouldn’t surprise anyone that its trade association would also fail.
The National Alliance of State Health Cooperatives (NASCHO), the Obamacare co-op health insurance trade association, has quietly closed its doors, The Daily Caller News Foundation Investigative Group has learned.
NASCHO once represented as many as 24 Obamacare non-profit co-ops that were intended to compete with for-profit commercial health care insurers and perhaps even drive them out of business. The Obama administration underwrote the experiment with $2.4 billion in long-term, low interest loans.
Dues from operating cooperatives funded NASCHO, which sought to represent the collective interests of the fledgling co-ops. It often operated without much transparency, and it appears to have died in much the same way.
NASCHO issued no press release when Janice S. VanRiper suddenly stepped down as its executive director. She was paid $249,000 annually to represent nonprofit health co-ops that mainly served poor and low-income families in search of health insurance.
Lavish salaries for the nonprofit executives were one of many problems that plagued the co-ops. In June 2015, TheDCNF found 18 of the cooperatives paid their top execs between $263,000 to $587,000.
The trade association also quietly deleted its website sometime in the last two months. It had been inactive for at least six months, and it shuttered its Washington, D.C. office. The manager who rented office space to NASCHO told TheDCNF the group provided no forwarding address. The association has not publicly posted its 2015 IRS 990 form.
A staff member at the National Association of Insurance Commissioners told TheDCNF that Kelly Crowe, its last executive director, had resigned, but they had little other information about the group.
“We have not heard from them since their executive director left a few months ago,” reported one NAIC staff member in an email to TheDCNF.
Critics of the co-ops believe this is the final, end-game for the Obamacare experiment.
“This is the final nail in the co-op coffin,” Grace Marie Turner, president of the nonprofit Galen Institute, told TheDCNF. “They have gone through federal money. They have gone through investor resources, and hundreds of thousands of people have lost coverage as a result. This is reflective of the collapse of the co-ops.”
Sally Pipes, president of the Pacific Research Institute, said the co-ops’ demise “was inevitable. It looked like they weren’t ever going to be sustainable.”
Ironically, the co-ops are dying of their own accord in the public healthcare marketplace as Congress grapples with a possible repeal and replacement of Obamacare.
Of the 24 original co-ops, only four remain holding on perilously for survival in Maine, Wisconsin, Montana and New Mexico.
In January, Maryland-based Evergreen Health Cooperative officially severed its ties to the federal Obamacare co-op program and announced it would seek to survive as a for-profit health insurance firm with private investors.
The Centers for Medicare and Medicaid Services loaned Evergreen more than $65 million.
The Maryland losses, however, are chump change compared to the losses suffered by three cooperatives longtime Obama insider Sara Horowitz created. She launched co-ops in New York, New Jersey and Oregon, receiving in the process more than $500 million in federal loans. All three failed.
In New York, the nation’s largest health insurance cooperative lost $365 million, and it also left a trail of another $160 million in unpaid bills to doctors, clinics and hospitals. Another 215,000 cooperative customers had to race to find new insurance from private carriers.
John Morrison, NASCHO’s first president, once called the advent of federally funded health care cooperatives an “historic opportunity,” exclaiming, “what an historic opportunity it is to inject into the marketplace a member-governed, nonprofit health carrier that is building from the ground up, writing from a blank state. It’s exciting.”
Morrison did not respond to TheDCNF’s request for comment.
Many of the cooperatives were led by a grassroots “movement” of passionate, progressive political activists who despised for-profit insurance companies but had little first-hand experience in running competitive insurance carriers.
“The people who were running the co-ops didn’t know what they were doing,” Turner said. “They did not have experience. They were operating on a wing and a prayer with $2.4 billion in federal money which they have now blown through,” she said.
Thomas Miller, a resident scholar at the American Enterprise Institute and a health care insurance expert, said the remaining co-ops “are now on their own just to save their lives.”
Miller said the cooperative movement initially hailed the idea of nonprofits competing with private insurance companies, but they never figured out how to meet the needs of patients better than private firms.
“They had to find a real place for customers,” he said.
“You had to meet needs and you have to do it at least as well if not better than other existing competitors. You need to have some rationale and some reason why your method of business is going to be different and actually works and over time attracts more customers. They never did it,” he said.
This report, by Richard Pollock, was cross posted by arrangement with the Daily Caller News Foundation.