Tags: obamacare | co-ops

Obamacare Health Co-Ops Struggle to Stay Afloat

By    |   Wednesday, 23 October 2013 10:22 AM

Healthcare co-ops established under the Affordable Care Act are in danger of collapsing under the weight of onerous regulation and unsustainable funding arrangements, The Washington Post reports.

The independent, non-profit health insurance providers were initially conceived as a way to create more competition within the Obamacare health insurance exchanges, and operate as a mechanism to help lower the costs of health cover for consumers.

The Senate crafted the proposal in 2009 during an early phase of drafting the Obamacare legislation, and Democratic lawmakers proposed that the co-ops would be funded by government grants.

But after fierce opposition from the insurance industry and changes to the original plan introduced as it went through Congress, the financial structure and regulation of the co-ops changed so significantly that industry experts now believe their viability is threatened.

"One provision after another got stuck in there to limit their probability of success," Karen Davis, a professor of health policy management at the Johns Hopkins Bloomberg School of Public Health, told the Post.

Specifically, the co-ops were no longer to receive the proposed $10 million in federal grants, and would instead get limited federal loans with tight repayment schedules, the Post reported. The organizations are also prevented from using federal money for marketing, barred from selling coverage to the large employer market, and prohibited from accessing equity markets or investor capital for funding.

Reviews of several co-ops in New York indicate they have high debt and may have been overstating assets, while New Jersey's co-op was projected to have expenses growing faster than revenue.

Maryland's three co-ops are forecast to have financial problems, disqualifying them from federal funding, while a co-op in Vermont has already folded and will not be able to repay a $4.5 million federal loan.

And while the program was initially meant to be nationwide, only two dozen co-ops have begun selling insurance on the new healthcare exchanges. At least nine have been projected to have financial problems, according to internal government reviews and a federal audit, the Post reports.

Health insurance professionals involved with the co-ops confirm that the organizations are in trouble. In the face of insolvency, taxpayers could be on the hook for nearly $1 billion in defaulted loans, while policyholders could end up having to pay their own medical costs if their co-op collapses.

Related stories:

Sebelius: Obama Didn't Know About Website Problems Before Launch

Ex-Apple CEO Sculley: Rollout Reflects Broken Government

© 2019 Newsmax. All rights reserved.

1Like our page
Healthcare co-ops established under the Affordable Care Act are in danger of collapsing under the weight of onerous regulation and unsustainable funding arrangements.
Wednesday, 23 October 2013 10:22 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved