Another One Bites the Dust: Ninth Obamacare Co-Op Implodes

Guy Benson
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Posted: Oct 27, 2015 11:01 AM
Another One Bites the Dust: Ninth Obamacare Co-Op Implodes

The "it's workingfile is getting pretty thick this month.  The latest addition, via the Associated Press:

A South Carolina health insurer has become the ninth insurance cooperative formed nationwide under the Affordable Care Act to fold. Consumers' Choice Health Insurance Co. said Thursday that it will not sell policies in 2016, a decision that will leave 67,000 individuals and business customers looking for new coverage. Ray Farmer, director of the South Carolina Department of Insurance, said Consumers' Choice and state regulators reached a mutual decision to shut down the company's business. He said the company was in a "financially hazardous condition."

It seems Mr. Farmer may have stumbled upon a solid new slogan for the entire law.  The New York Times analyzes the "cascading failures" of Obamacare co-ops across the country:

The grim announcements keep coming, picking up pace in recent weeks. About a third, or eight, alternative health insurers created under President Obama’s health care law to spur competition that might have made coverage less expensive for consumers are shutting down. The three largest are among that number. Only 14 of the so-called cooperatives are still standing, some precariously. The toll of failed co-op insurers, which were intended to challenge dominant companies that wield considerable power to dictate prices, has left about 500,000 customers scrambling to find health insurance for next year...At a time when the industry is experiencing a wave of consolidation, with giants like Anthem and Aetna planning to buy their smaller rivals, the vanishing co-ops will leave some consumers with fewer choices — and potentially higher prices...The shuttering of these start-ups amounts to what could be a loss of nearly $1 billion in federal loans provided to help them get started. And the cascading series of failures has also led to skepticism about the Obama administration’s commitment to this venture. Some policy analysts say they were doomed from the beginning.

Doomed from the beginning. So why flush a billion taxpayer dollars setting them up? Intraparty Democratic politics, the Times reports:  "Created as a concession to Democrats who wanted the health care law to include a government-run plan as an alternative to private insurers, the co-ops faced significant hurdles from the start."  Liberal Democrats demanded a "public option" within Obamacare, which critics (and supporters) rightly predicted would directly facilitate the demise of America's private health insurance industry.  With so many elected Democrats still peddling the "keep your plan" fiction at the time, Obamacare's government option provision was deemed politically unviable and abandoned.  The co-ops were an expensive consolation prize to its supporters.  Ironically, now that this experiment is collapsing, even more Americans are being betrayed by the false assurance that they'd be able to maintain their preferred plans.  Democrats, predictably, are blaming Republicans for the shortcomings of a fatally flawed law that was crafted and passed exclusively by Democrats. Meanwhile, on top of high out-of-pocket expenses, monthly rates keep climbing:

Premiums are expected to rise in many parts of the country as a new sign-up season under President Barack Obama's health care law starts Nov. 1. But consumers have options if they shop around, and an upgraded government website will help them compare...Independent experts are forecasting bigger premium increases in 2016 than last year, averaging from the high single digits to the teens. Next week the government will release a master file that researchers use to piece together national trends. Averages won't tell the story, because health care is local. Premiums can vary widely from state to state, and within a state.

Obamacare supporters pledged that the "Affordable" Care Act would drastically reduce healthcare costs for all Americans.  But hey, at least consumers will be treated to an "upgraded government website," two full years after Healthcare.gov crashed and burned on the launchpad.  I'll leave you with a reminder that this law is packed with harmful unintended consequences -- in addition to the intended ones -- that often disproportionately impact those who can least afford it:

Tens of thousands of people with modest incomes are at risk of losing health insurance subsidies in January because they did not file income tax returns, federal officials and consumer advocates say...Many of the people potentially affected have incomes so low that they would not otherwise have to file tax returns. But if they received insurance subsidies in 2014, they were required to file this year...In July, the Internal Revenue Service said 710,000 people who had received subsidies under the Affordable Care Act had not filed tax returns and had not requested more time to do so. If those people do not return to the marketplace this fall, they may be automatically re-enrolled in the same or similar health plans at full price. And when they receive an invoice from the insurance company next year, they may be shocked to see that their subsidies have been cut to zero...The I.R.S. also said 760,000 taxpayers had received subsidies and filed returns but had not attached the required form comparing the subsidies paid with the amount they were entitled to receive. Taxpayers describe that document, I.R.S. Form 8962, as daunting. “The premium tax credit form, the dreaded 8962, is really hard,” said Eileen P. Duggan, a piano teacher and freelance writer in Maplewood, Mo., outside St. Louis, who filed the form with her tax return. “It’s enough to make you cry, that form. It was almost impossible to figure out.

Altogether now, true believersIt's working.