Ed noted earlier today that enrollment in Obamacare programs has been disappointing to say the least and that may already be having an impact on some large private insurers. But the Obamacare exchanges remain in even worse shape. We’ve been covering the rapid collapse of the exchanges for some time now, with Kentucky and Tennessee seeing theirs go under just a few months ago. New York’s turned into another disaster over the winter, with many doctors and hospitals left holding the bag for unreimbursed expenses.
The trend seems to be holding for 2016, with even more of these operations making a handful of people relatively wealthy, but the operations themselves running deep in the red. (Daily Caller)
Eight of the 11 remaining Obamacare health insurance co-ops appear likely to fail this year, according to an analysis of financial documents obtained by The Daily Caller News Foundation.
Twelve of the original 23 federally-financed co-ops have already collapsed. The co-op program was funded with $2.5 billion in 2010.
“In general, there’s not a turnaround in sight. The same problems that plagued them before are continuing,” Thomas P. Miller, senior fellow at the American Enterprise Institute who previously served as the senior health economist for the congressional Joint Economic Committee, told TheDCNF.
The numbers on the co-ops’ collective bottom lines are bad and it’s the kind of bad which won’t be turned around without either a huge upsurge in the market (which is forecast by nobody) or another massive infusion of taxpayer dollars. (Good luck with that.) Of the eleven remaining outfits, every single one of them reported losses instead of profits. The current projections indicate that eight of those eleven will be in default by the end of this year and four of those will most likely have their doors closed. The remaining “healthy” co-ops may still be around, but they’ll be operating at a loss.
I suppose we should warn everyone which operations are about to go under so they can make plans to arrange for other coverage. Well.. we would let you know, but the government is refusing to say.
Although CMS officials have steadfastly refused to identify the eight “at risk” co-ops, the annual reports clearly identify those facing grave financial problems. Data shows last year all 11 co-ops lost money and the red ink also afflicted the four “healthy” co-ops that may survive.
The co-ops with the most losses in 2015 were in Massachusetts, Oregon, Ohio, Connecticut, Montana, Wisconsin, Illinois and New Mexico. All eight burned through about 50 percent of their total assets in 2015. The assets were supposed to last for 20 years under the terms of the federal funding program.
The operating model of these plans was built on a foundation of shifting sand from the beginning. In order for the model to work, huge numbers of younger, healthy, working adults would have to have signed up for Obamacare coverage, presumably to avoid the penalties (I’m sorry… taxes) which the federal government is holding over their heads for non-compliance. But the premiums for the plans are still not very cheap at all unless you qualify for a taxpayer funded subsidy and the deductibles are so high that many shoppers who can afford basic coverage won’t bother taking the hit. If they’re going to sign up anywhere it will be through their employer or a private plan with better options.
That leaves the co-ops stuck with a customer base which is largely poorer and sicker, relying on government subsidies to make their payments for them. If the last of the exchanges closes, I await the announcement from the White House as to how this was still a fantastic success and that everything is still going as planned.