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Another One of Obamacare’s Failures

March 18, 2016 Posted by Patrick Marvin - No Comments

The signature “achievement” of Obama’s Presidency, Obamacare, was dealt yet another major blow last week by the realization that it likely lost billions more of our taxpayer dollars.

In testimony before a Senate panel, top Obamacare officials confessed they can’t guarantee that health care co-ops will ever repay the more $2 billion in federal start-up loans they received under Obamacare.

Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services, admitted that it’s “too early to say” if the co-ops will pay back these loans of taxpayer dollars.

But that’s just the Washington D.C. way of saying “the taxpayers will be left footing the bill.”

What is a co-op?

Health care co-ops, or consumer owned and operated plans, are essentially non-profit health insurance companies created by Obamacare. They were intended to provide competition in the insurance market – but like many things created by the federal government, they are proving to be nothing short of a financial nightmare.

The 23 co-ops established by Obamacare received a total of roughly $2.4 billion in loans to help them get going, and get off the ground. They were touted by liberals and advocates of government-run health care as a magic pill that would lower prices for patients, and compete with private health insurance.

However, that was far from what actually happened. All but two of the co-ops were still losing money by 2014, and failing to turn a profit. That same year, thirteen of them failed to meet their enrollment projections.

Now, twelve of the 23 co-ops have completely failed, and stopped offering coverage altogether.

“These failed co-ops were a costly experiment gone wrong, and real people got hurt,” said Sen. Rob Portman, R-Ohio, chairman of the Permanent Subcommittee on Investigations.

The collapse of these co-ops caused 740,000 residents in 14 different states to lose health insurance. These co-ops received about $1.2 billion of that federal loan money, and they owe another $1.13 billion in liabilities to the federal government.

In fact, none of the failed co-ops repaid even a single dollar of the billions in federal loans they received. So don’t hold your breath on any of that taxpayer money ever coming back.

Why did this happen?

But the question remains – why are these co-ops failing, despite the massive amount of federal money they are receiving?

The answer is quite simple: because they are run by the federal government.

Rather than given freedom and flexibility, and the ability to be competitive and efficient, these co-ops have been handcuffed by ridiculous and counter-productive federal regulations that have seemingly set them up to fail.

For example, the co-ops are prohibited from hiring employees who had served at the executive level of any health insurance company. This effectively guarantees that co-ops have to hire inexperienced employees who lack critical knowledge on this complex industry.

Co-ops are also banned from raising any money besides what they were given in federal loans, turning a profit, or spending any of their federal money on marketing or acquiring new customers. This makes finding new customers – and bringing in revenue – an enormous burden.

Given all of these restrictions, it’s a miracle that many of these co-ops have lasted this long.

But amazingly, many proponents of government-controlled health care can’t accept these facts. They actually argue that these co-ops just needed more taxpayer money in order to be successful. Instead of receiving $2 billion in loans, they would have preferred that they receive a whopping $10 billion, as originally designed by the makers of Obamacare.

“In 2013, the Republican Congress slashed funding for loans and grants to co-ops,” said Rep. Jim McDermott (D-WA). “These cuts have devastated co-ops across the country.”

But remember — none of the failed co-ops repaid even a single dollar of their billions in federal loans. So would throwing more money at this problem really made any difference at all?

What about Maine?

One of these co-ops –Community Health Options– is set up right here in Maine. And up until this year, it had been touted as one of the only bright spots among Obamacare’s colossal failures.

But experts now say that it too is failing, and on the verge of going the way of other government run programs like Dirigo Health. According to the chair of the Senate Finance Committee, Sen. Orrin Hatch (R-UT) Community Health Options will likely collapse, and is nothing more than a “failed experiment.”

This shouldn’t come as a huge surprise, as Community Health Options actually had to stop accepting customers this year, and suspend its enrollment. The co-op said this decision “is a consequence of significant enrollment growth over the last two years and higher than expected claims costs in 2015.”

While this move did not effect existing customers, it nonetheless is an ominous sign, and a clear indication that government-run health insurance is not working.

Mainers who are counting on Community Health Options for coverage would be wise to start searching for better options.