ObamaCare’s co-op programs aren’t meeting enrollment goals, losing millions of dollars

When the so-called "public option" single-payer healthcare program was scrapped during the legislative "debate" over ObamaCare in 2009, lawmakers working on the bill created the Consumer Operated and Oriented Plan Program as a compromise. The non-profit co-op program is meant to compete with private, for-profit health insurance plans in the individual and small group markets. The 2010 healthcare law provided $3.4 billion in start-up funding to help get the program off the ground.

Well, the 23 op-ops that were subsequently created as a result of ObamaCare are in serious financial trouble, according to a new report from the Department of Health and Human Services’ Office of the Inspector General. The audit found that 21 co-ops were losing money as of the end of 2014 and 13 are not meeting enrollment projections. These problems could put at risk the repayment of $2.4 billion in taxpayer-backed loans from the Department of Health and Human Services.

"We determined that 21 of the 23 reviewed CO-OPs incurred net losses from January 1 through December 31, 2014," the report notes. "More than half of the 23 CO-OPs had net losses of at least $15 million for this period. For 19 of the [21] CO-OPs with net losses, claims’ expense exceeded premium revenue for this period. The remaining CO-OPs with net losses reported higher premium revenues than claims’ expense, but revenue was insufficient to meet general administrative expenses."

The 21 co-ops lost a total of $382,099,933. The Kentucky Health Cooperative took the hardest hit, incurring losses of more than $50.4 million. Wisconsin’s Common Ground Healthcare Cooperative was a distant second, losing over $36.5 million. Health Republic Insurance of New York was not far behind, at nearly $35.2 million in the red. Maine’s co-op, Maine Community Health Options, was the only one that did not lose money.

Data for Iowa and Nebraska’s joint co-op, CoOportunity, was not reported; however, the Iowa Insurance Commissioner took control of it because it was in deep financial trouble. The co-op was shut down earlier this year. Tennessee’s co-op, which lost $22.1 million, also faced problems. Enrollment was halted in January, during the 2015 open enrollment period. The Community Health Alliance has filed a 32 percent rate hike with Tennessee’s insurance commissioner.

Nearly all co-ops were expected to lose money in 2014, but 19 exceeded projected losses, in most cases by millions of dollars. The losses cast doubt on income projections for 2015 and 2016.

HHS OIG CO-OP Income Projections

The Centers for Medicare and Medicaid Services, which, along with the Department of Health and Human Services, oversees much of ObamaCare’s implementation, has warned some co-ops that they are in jeopardy of being shuttered. "CMS recently placed four CO-OPs on enhanced oversight or corrective action plans, and two CO-OPs on low-enrollment-warning notifications," the report explains. "CMS will have to assess these CO-OPs to determine whether they are viable and sustainable and continue to serve the interests of their communities and the goals of the CO-OP program."

While the loans the co-ops received from the federal government are supposed to be paid back, the report raises doubt whether many of them ever will make good on their obligations to taxpayers. Thanks, ObamaCare!

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