ONE of many questionable ideas baked into Obamacare was creation of new “nonprofit” entities to sell insurance. Liberals argued that these health insurance cooperatives would increase competition and drive down insurance prices. Instead, most of those co-ops are now flailing, despite getting more than $2 billion from the federal government.
Fourteen of 23 co-ops established under Obamacare have enrolled far fewer people than projected, justifying concerns over their financial viability. Some enrollment numbers discussed at a recent congressional hearing were shocking. Minuteman Health in Massachusetts expected to enroll 37,003 people in 2014. As of April 15, only 1,435 had signed up. Tennessee Health Alliance enrolled only 354; officials had expected 25,082. The Tennessee co-op has received $73 million in federal funds — so far.
Nationally, 575,000 people were expected to buy insurance through the 23 co-ops established by Obamacare; just 450,000 did. Some co-ops blamed their woes on other Obamacare follies, such as the massive failure of state-run exchanges in Massachusetts and Oregon. It seems one Obamacare disaster births another.
But these complaints ignore the many flaws embedded throughout the federal health care law, including the co-op programs. Under federal law, the new co-ops can’t be run by an existing health insurance company. This means those businesses lack the historical actuarial data necessary to appropriately price insurance products and generate enough revenue to cover enrollees’ medical expenses. The co-ops also have to negotiate provider networks while lacking the patient volume that would allow them to obtain lower rates and provide policyholders a wide range of doctor choices.
A handful of co-ops did exceed enrollment projections. Consumers Choice Health Plan of South Carolina expected 19,204 enrollments in 2014, but had 51,506 by May 1. Company officials attribute this to offering the lowest premiums in many parts of South Carolina.