When ObamaCare loaned $2.4 billion dollars to establish 23 not-for-profit CO-OPS around the country, their intention was to create lower-priced options and foster competition.
You already know that more than half of these CO-OPs have now failed, costing the taxpayers about $1.2 billion in loan defaults. These defaults are directly related to the failure of the Government to provide the promised third year funding to these CO-OPS. They left the CO-Ops with badly damaged balance sheets, and the inability to pay claims.
This leads to a new problem – The largest CO-OP, Health Republic in NY, owes hospitals an estimated $150 Million in claims that may never be paid – because they didn’t get the promised funds from ObamaCare. It remains to be seen if the smaller hospital networks can survive that kind of a loss.
We know that commissions are not getting paid to brokers, and by extension you have to assume that other providers – Doctors, Laboratories, etc – are going to get stiffed as well. One can only assume the issue is the same for the other 10 failed CO-OPs, albeit on a smaller scale.
In a great quote, the CEO of Health Republic Oregon (which also failed) likened ObamaCare to a giant game of Jenga. “You can only pull out so many pieces before it will implode on itself.”
From the outset, the CO-OPs were prohibited from using the seed money for advertising (how were they supposed to attract members?). A popular uprising occurred after the administration broke their promise to allow you to keep your health plan – a move designed to force people into the new plans; so President Obama reversed that decision, taking customers out of the CO-OP market.
Then, under Republican pressure, The President vowed no taxpayer money would be used in the bailout funds, leaving only funding from insurers who made profits. The result was the government couldn’t pay the CO-OPs the promised funds this October, collapsing the system. Insurers had already locked into the premiums for the coming year and couldn’t raise them now, to balance the lost funds under the law. So they closed.
And we all get crushed by the falling pieces.