Health Co-Ops Established Under Obamacare Already Failing

Nearly half of the government-backed, nonprofit co-op health plans set up under Obamacare have already closed or are expected to close by year's end while the future of others remains in jeopardy going into 2016.

"Things change," Kevin Counihan, insurance marketplace CEO for the Centers for Medicare and Medicaid Services, told Fox News,  saying the failures are "inevitable" for the healthcare industry.

"There is a natural ebb and flow to this business," he said. "You see this in start-ups in all industries, and it's also true in healthcare."

The co-ups were opened with more than $2 billion in taxpayer loans, and now customers using them must seek other coverage, and lawmakers are demanding answers about what's happened.

But the Obama administration has said that no more money will go to opening new co-ops, and isn't making any predictions about what will happen with the ones that remain.

Ed Haislmaier, senior research fellow for health policy for the Heritage Foundation, said the program was "a fairly risky exercise" all along, and he does not expect more announcements about further closures before next fall, as regulators have already moved against the weakest co-ops so consumers can pick a new plan during the current enrollment season.

As the co-ops were opened with federal loans, it's not certain if they'll be repaid, and Tarren Bragdon, CEO for the Foundation for Government Accountability, told Fox he doesn't have much hope that it will happen. He says the people who will be hurt the worst are the ones who depended on the co-ops for their healthcare needs.

Counihan said the government is working to be sure consumers don't see a coverage gap, and according to CMS, nine of the co-ops will operate under the federal government, and the agency plans to help them shop and compare their plans.

But some of the co-ops operate through their states' exchanges, which will have to take in the co-op customers.

Obamacare supporters say Congress is at fault for the closures, but Haislmaier blames the co-ops themselves for "counting on money that was uncertain to begin with."

Related Stories:

• New York State Launches Probe of Failed Obamacare Co-Op
• Forbes: Obamacare's Low-Cost Co-ops Going Bankrupt