Government-Run Obamacare Co-ops Begin Their Downward Spirals
When the details of Obamacare were being ironed out, some in Congress wanted a “public option” in health care—a massive, government-run, single-payer health insurance system that liberals had dreamt about for years. When political realities made that a non-starter, many legislators threw their support behind the idea of government-backed nonprofit health insurance cooperatives that would be able to compete directly with private insurers in the insurance exchanges. The idea was that these essentially public cooperatives, run side-by-side with private insurers, could operate more efficiently while they simultaneously picked up poorer enrollees.
Well, it’s 2015, and of the 23 co-ops created, ten have already shut their doors. As PBS News Hour reports, the failure of the cooperatives came down to dollars and cents.
They had basically had solvency issues, financial solvency issues.
If they were the lower price point, that tended to attract sicker beneficiaries. That would drive up their costs. They had anticipated fairly large payments from the federal government to help offset the cost of those sicker folks.
But, of course, as we mentioned earlier, there was a change and their funding was cut early on in inception of the co-ops. And then, secondly, there was another legislative change that adjusted the amount of money that the federal government could pay them.
So the cooperatives attracted enrollees whose health was (in general) poorer and who couldn’t pay very much—a disastrous mix for an insurer—and then the cooperatives couldn’t survive after the government refused to give them the bailout they were expecting.
We’ve said it before, but it bears repeating: coverage is not care, and that fact is especially salient in the case of these cooperatives. Indeed, these government programs are failing the very vulnerable beneficiaries who they were specifically designed to attract. There are other, better ways forward on health care policy. More government is not the way.
