Most Health Insurance Co-ops Are Losing Money, Federal Audit Finds

[former9thward]

Source: New York Times

WASHINGTON — Most federal insurance cooperatives created under the Affordable Care Act are losing money and could have difficulty repaying millions of dollars in federal loans, an internal government audit has found, prompting the Obama administration to step up supervision of the carriers.

Daniel R. Levinson, the inspector general at the Department of Health and Human Services, said that most of the insurance co-ops enrolled fewer people than they had predicted, and that 22 of the 23 co-ops lost money last year.

Even as overall enrollments for insurance have increased, many of the co-ops are still losing money, a review of 2015 data by federal health officials shows.

In February, the Iowa insurance commissioner moved to shut down a nonprofit co-op insurer, CoOportunity Health, created with $145 million in federal loans, and a state court found it insolvent because of “adverse claims experience.” Another carrier, the Louisiana Health Cooperative, started with $65 million in federal loans, said it would voluntarily halt operations at the end of this year.

Read more: http://www.nytimes.com/2015/08/15/us/most-health-insurance-co-ops-are-losing-money-federal-audit-finds.html?ref=us&_r=0

[Bubzer]

1. Insurance should never have been part of the system to begin with!

We need single payer.

[ananda]

9. Yes we do!

And we need a fair system of taxation to pay for it.

[Bubzer]

11. +1

[Doctor_J]

2. The train wreck that is US healthcare will end with two or three for profit

companies cleaning out every American's bank account. This was the entire thrust behind heritage care to begin with. Mrs Clinton doesn't think we need or deserve single payer or a public option, so she won't be getting my vote.

[tabasco]

3. OMG!!! It's the end of the world!!!

Dr. Martin E. Hickey, the chief executive of the New Mexico co-op, who is also chairman of the National Alliance of State Health Co-ops, said it was unrealistic to expect them to achieve a surplus right away.

“This is inherently a risky venture, a tough, tough business,” Dr. Hickey said. “There will likely be a handful of co-ops that fail. I don’t deny that. But you will probably see the red ink disappear for some plans starting next year.”

Susan Dunlap, a spokeswoman for the Kentucky Health Cooperative, said that 52,000 people were now enrolled in its plans, down from 56,680 at the end of last year. But, she said, the co-op still has more than half of all the people who obtained coverage through the state’s insurance exchange.

The Kentucky plan lost $50 million last year, more than any other insurance co-op, as it paid out $1.25 in claims for every dollar it collected in premiums.

“We attracted many consumers with serious illnesses,” Ms. Dunlap said. “One of our most popular plans had low premiums, low out-of-pocket costs and a large network of providers. It’s difficult, it’s uphill, but we are energetic and hopeful. Trends are going in the right direction.”

[Doctor_J]

5. perfect! just what I want!

My healthcare entrusted to an "inherently risky venture, a tough, tough business"

First the BOG insisted this is an excellent first step toward single payer. Now you insist it's great the way it is (even for those of us paying fifteen times what we did before). Seriously, do you not give a shit about anyone except Obama?

[pnwmom]

4. The next step is to figure out why co-ops like Maine's, which turned a profit, are doing better than others.

But no one should be surprised that, in the first year or two of doing business, a co-op isn't yet financially successful.

[Bubzer]

12. +1

[Sunlei]

6. rx drug prices seem like they have gone much higher in the past year, in the USA

Not sure what the answer could be.

Can the Gov. demand wholesale price plus, a small 'profit' for rx drugs used for the insured? Or perhaps use Federal subsidy money to buy common rx drugs from another first world country? or even allow insurance from another first world country in the USA.

[OldSparky]

7. Not to worry!

We're gonna be fine!

[Z_California]

8. Most businesses lose money first 3 years.

The important points in the article:

"Michael J. Fagan, a spokesman for Health Republic, said that the carrier lost $77.5 million on premium revenue of $521 million last year, for a “negative margin” of 14.8 percent. But, he said, “the co-ops were never intended to be profitable in their first three years.”"

"Likewise, Tom Zumtobel, the chief executive of the Arizona co-op, Meritus Health Partners, said it lost $7.2 million in 2014 and was projecting a loss of $6.7 million this year, but would operate in the black next year."

[former9thward]

10. Most businesses don't have mandatory customers.

Do they? And they certainly did not tell Congress this when the ACA was being debated. Everything was rosy then...

[pnwmom]

13. In the first years there have been very small penalties for not joining, and many still hadn't

during the time period covered here.

Of COURSE Congress knew this would happen -- that's why they set it up the way they did, so there were funds to help them keep going in the early years.

The law anticipated that many co-ops might need assistance in the early years, and provides for that assistance.