The Associated Press reminds us that story of collapsing co-ops in ObamaCare is far from over. Only one co-op in the country showed a profit before Congress restricted funding for risk-corridor payments to the revenues received from insurance companies — Maine’s Community Health Options, which made almost $11 million in the second year of ObamaCare operations. They’re now deeply in the red, thanks mainly to the rapid increase in health-care costs that the Centers for Medicare and Medicaid Services (CMS) admit is being driven by the Affordable Care Act itself:
The lone health insurance cooperative to make money last year on the Affordable Care Act’s public insurance exchanges is now losing millions and suspending individual enrollment for 2016.
Maine’s Community Health Options lost more than $17 million in the first nine months of this year, after making $10.9 million in the same period last year. A spokesman said higher-than-expected medical costs have hurt the cooperative.
The announcement casts further doubt on the future of the cooperatives, small nonprofit insurers devised during the ACA’s creation to inject competition in insurance markets. These co-ops immediately struggled to build their businesses. A dozen of the 23 created have already folded.
It’s not looking good for the remaining co-ops, either:
An Associated Press review of financial statements from 10 of the 11 surviving co-ops shows that they lost, on average, more than $21 million in the first nine months of this year. Those losses range from $3.9 million reported by Maryland’s Evergreen Health Cooperative to $50.7 million booked by Land of Lincoln Mutual Health Insurance Co. in Illinois.
How could these co-ops, created by ObamaCare to provide competition to traditional insurers for better premium rates for consumers, have been so blindsided about health-care costs? Didn’t Obama and the Democrats promise that the ACA would “bend the cost curve downward”? Instead, health-care costs rose faster in 2014 than any year since 2007, according to a new report from CMS. Avik Roy gives an “I told you so” at Forbes:
A number of Obamacare’s most partisan advocates have claimed that the law has “bent down the cost curve,” because the growth rate in U.S. health spending has been slowing since 2003. Two obvious facts eluded these advocates: first, that in 2003, George W. Bush was president, and Barack Obama was a state senator in Illinois; and second, that the bulk of Obamacare only went into effect in 2014, and until last week, we didn’t have data on health spending in 2014.
These basic points have eluded columnists like New York’s Jonathan Chait, who describe skeptics of Obamacare’s health spend-lowering properties as “haters” who are a “testament to the power of the human spirit in the face of all factual evidence.”
Jon will have to include as “haters,” then, members of President Obama’s own administration. A group of economists and statisticians at CMS described the 2014 health expenditure data last week in Health Affairs. The growth rate of national health spending in 2014 was 5.3%, they found: the highest rate since 2007. “The return to faster growth,” they wrote, “was largely influenced by the coverage expansions of the Affordable Care Act.”
Spending growth was up across the board: in private health insurance (4.4%), in Medicare (5.5%), and especially in Medicaid (11.0%), which Obamacare significantly expanded.
It’s not just the co-ops that got blindsided by this, either. Traditional insurers have had to increase costs by as much as 50% in some states for 2016 over 2015 premium rates just to keep up (Minnesota being one of those states). Others have dropped out of some state exchanges to cut their losses. United Healthcare warned last month that they will exit the individual-plan business altogether after 2016, thanks to an ocean of red ink.
Wait until next year, I warned yesterday at The Fiscal Times:
Just wait until they [CMS] start calculating costs for 2015 and 2016, with the premium spikes and consumers left exposed by escalating deductibles.
So let’s recap. Obamacare has depressed job growth, costs are escalating at a higher rate, barely a dent has been made in the numbers of uninsured, and insurers are either exiting the markets or failing altogether. Under any other circumstances, a program that failed on its promises so badly would have all sides moving quickly to repeal it and work on a replacement. Don’t bet on that outcome from this White House and its dwindling number of Democratic supporters on Capitol Hill. They will surely try to sell us the illusion of competence and success.
That doesn’t mean we have to buy it.
Don’t expect the remaining co-ops to last much longer — or for traditional insurers to stick around for much longer than that, either. The death spiral is approaching, and the need to put an end to this disastrous government intervention is becoming more and more acute.