More Co-Ops Go Flop

Last week a webinar was given by several well informed professionals on the Affordable Care Act and the topic at hand, co-op shut downs. We are 8 down and counting stated Scott Harrington, Wharton School at UPenn Professor of Health Care Management, echoing the sentiments of the other panelists. After several more health co-ops have shut their doors just before the opening of the 2016 enrollment period one can’t help but say who is next. Many of the cooperatives seemed to fail before they even started, but with the prospect of true governmental help they could have survived.

As stated during the webinar, “In the real world businesses that lose money don’t stay open.” Unfortunately there is a bigger picture for this “lose money” statement. Lets take a look at Colorado Health Op for example. Their projections and financial model was set to pay back their loans of 73 million. Although, they also stood on the governments promise to provide their risk corridor funds. When it came time for the government to hold up their end of the law and provide the funds requested by Colorado Health Op, among several other cooperatives and smaller insurance companies, they only provided 12% of the 100% of funds provided.

How can our government do that you might ask, when it is written into the law? They can’t, but they did with the stipulation that the full 100% would be paid in time, just not this year in full. Convenient that the Department of Insurance (DOI) shut the doors to Colorado Health Op for failing to have enough funds in reserve due to the government defaulting on their promise and now the government is released from their obligation. Keep in mind it will also cost $40 million to close Colorado Health Op’s doors according to Chuck Holum, Colorado Health Op Board President.

Tom Miller made a point during the webinar of saying, “(co-ops) resemble a family in financial trouble, taking out additional credit cards to pay their daily bills.” Well Mr. Miller those extra credit cards don’t have to be taken out if the government would have held true to their original “credit card” terms of use! This is an experiment gone bad where tax payers are the ones suffering. There’s 2.3 billion put into this floundering project. Who will pay it back? The American people will end up taking the obligation upon themselves without consent, and it shouldn’t be our burden to carry.

Now we sit and wait to see the next episode of Survivor, staring the remaining cooperatives in 2016. It will be an interesting year, but here’s to hoping the remaining survive and we have seen the last of the closures. Sadly this will probably be false hopes.

Watch the recorded webinar HERE

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