When Democrats were ramming Obamacare down Americans’ throats, many of them wanted a “public option” that was supposed to demonstrate just how efficient and affordable government-run healthinsurance could be. What they settled for was something called “co-ops”—which stands for Consumer Oriented and Operated Plans.
As the Washington Post explains, “The co-ops differ from traditional insurers in their nonprofit status, consumer focus and organizational structure; they will be governed by boards controlled by policyholders.” In other words, the co-ops would get rid of those greedy, self-interested actuaries and insurers who were profiteering on the backs of the sick. Not full-blown socialized medicine, but a good start.
Turns out the left will have to wait a little longer to prove the blessings of government-run healthinsurance. Standard & Poor’s Ratings Services justreleased its assessment of the 23 state co-ops, and all but one are underwater.
S&P writes: “All but one of the [23] co-ops included in our study reported negative net income through the first three quarters of 2014. … Most co-ops’ weak operating performance is a result of high medical claims trend and not enough scale to offset administrative costs. … In fact, nine of the co-ops (including CoOportunityHealth) reported a MLR [i.e., medical loss ratio; the claims compared to premiums] of 100% or more through September 2014.”
In short, the co-ops are leaking money faster than an Obama green energy project, or Obama’s student loan program. Some are even spending more on claims than they’re receiving in premiums—the MLR—and that’s before any administrative costs.
The Wall Street Journal reported in January, “Iowa’s insurance regulator plans to shut down insurer CoOportunity Health, marking the first failure of one of the nonprofit cooperatives created under the Affordable Care Act. … CoOportunity had been seen as one of the most successful coops in terms of enrollment volume, but according to the Iowa regulator, the insurer’s large pool of sign-ups created financial pressures as their health-care costs outran its funds.”
It may have been the first, but it probably won’t be the last. As S&P concludes, “most [co-ops] seem to have adequate liquidity at least to survive in the near term.” Not what you’d call a glowing financial report.
The backstory is that leftists think health insurance and health care—and pretty much anything else, for that matter—would be available and affordable if only we took the profits out and let altruistic bureaucrats run the system.
And it’s more than just “controlled by policyholders.” People connected to the healthinsurance industry—that is, people who might actually know something about health insurance—are explicitly prohibited from being on a co-op board. Next thing you know leftists will try to prohibit anyone with any medical training from performing surgery. You see the problem.
But it turns out there is more to running a healthinsurance plan than altruism. People file claims, especially very sick people. It takes actuaries who know how to price the policies and administrators who can manage the care and claims—and try to minimize fraud.
