ObamaCare Phony Markets Losing Billions
Train wreck: 22 of 23 ObamaCare co-ops operated under a net loss in 2014.
An audit report conducted by the Department of Health and Human Service’s inspector general found that 22 of 23 ObamaCare co-ops operated under a net loss in 2014, with more than half of them also missing their enrollment quotas by spectacular margins. Score another fiscal disaster for the Democrats’ health care train wreck.
The co-ops were created under ObamaCare as nonprofit insurance companies injected into the marketplace to stir competition in areas where few insurance options existed. Of course, the plan is far from consumer oriented, as it relies on nothing short of pure market manipulation by the government to artificially foster a competitive market where none existed. Oh, and by the way, this farce is propped up with taxpayer money.
The co-ops initially received $2.6 billion in startup money, and another $355 million in emergency funds last year from the Centers for Medicare and Medicaid Services, but to no avail.
One by one, the co-ops have been falling short of solvency. The CoOpportunity of Iowa and Nebraska failed even after exceeding their signup quota and receiving $145.3 million in startup loans. Tennessee’s co-op froze enrollment due to adverse financial conditions. Louisiana’s Health Cooperative announced it was shutting its doors at the end of this year. And the list goes on.
In most cases, bad management and bureaucratic ineptitude were behind the red ink, but many co-ops also suffered because of enrollment lapses. Louisiana barely reached a third of its projected enrollment figure. Arizona’s co-op counted on pulling in 23,998 people, but had to settle for a paltry 869.
Andy Slavin of the Centers for Medicare and Medicaid Services glibly remarked, “As with any new set of business ventures, it is expected that some co-ops will be more successful than others.” But this near-total failure of the ObamaCare co-op system cannot be blamed on the fickle nature of business in an unforgiving marketplace. ObamaCare has nothing to do with a free market.
The HHS report came as no surprise to economic analysts at A.M. Best and Standard & Poor’s. Earlier this year, both groups separately came to the conclusion that the chance for failure of all the co-ops was nearly absolute.
As Investor’s Business Daily noted, “This sort of financial high-wire act might make sense if the co-ops were actually putting downward price pressure on the ObamaCare market. But that, too, has turned out to be a cruel joke.”
Insurance companies in nearly every state, including 17 of the 21 still-functioning co-ops are requesting double-digit premium increases next year. Further proof that ObamaCare has done nothing to solve health care’s cost problem, and yet another example of government’s fundamental inability to manage affairs best left to the private sector.
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