Nov 17, 2015
Obamacare’s CO-OP Collapse
Post by Derek Yale
More than half of the nonprofit Consumer Operated and Oriented Health Care plans (CO-OPs) set up under Obamacare have collapsed, demonstrating to Americans what happens when bureaucrats take control of the nation’s health care system. Check out Freedom Partners’ Senior Policy Adviser Nathan Nascimiento’s piece in The Hill newspaper to learn more about the failed CO-OPs that have wasted nearly $1.3 billion in taxpayer dollars.
The Affordable Care Act’s CO-OP Collapse
The Affordable Care Act is based on a simple theory: that bureaucrats in Washington, D.C. are capable of creating a working healthcare system for the entire nation. Reality hasn’t borne this theory out.
The latest proof is the ongoing failure of the law’s Consumer Operated and Oriented Plans. More than half of these organizations have now collapsed, most of them in just the past few weeks.
“Co-ops,” as they’re known, were a critical part of the Affordable Care Act. Chartered by states and subsidized by Washington, these nonprofit entities compete with traditional health insurance companies. The federal bureaucracy that funds and regulates them intended co-ops to “offer competitive health plans in the individual and small group markets.” They were viewed by the law’s supporters as halfway houses between a fully private and a fully public health insurance system, and they were specifically designed to cover people who were traditionally underserved by the existing health-insurance system.
After the Affordable Care Act was enacted, states established 24 co-ops, receiving $2.4 billion in low-interest federal loans. Their business model was typically to offer underpriced plans backed with an implicit guarantee of federal tax dollars to cover any losses.
Unsurprisingly, this model quickly ran afoul of reality.