Saturday, October 24, 2015

WSJ: More health insurance cooperatives implode

The Wall Street Journal reported earlier this week that one of the cogs in the Obamacare machine is falling apart:

Health cooperatives are collapsing at such a rapid clip that some co-ops and small insurers are forming a coalition to consider legal action to try to change health-law provisions they blame for their financial distress.

Colorado’s co-op and one in Oregon announced Friday that they were folding, joining six others that have already collapsed or said they will unwind operations. The eight co-ops have received nearly $900 million in federal funds that may not be paid back....

The coalition is being formed by dozens of surviving health coops, smaller insurers and new benefit providers that say their survival is at risk, said Martin Hickey, chairman of the National Alliance of State Health Coops, the trade group for the co-ops. The coalition wants changes to a federal formula known as risk adjustment, which takes money from plans with healthier and younger enrollees and gives it to plans with older and sicker customers to spread out financial pressures on insurers.

The health co-ops and smaller insurers say the formula, along with another health law program that aims to offset insurers’ financial losses, is putting them out of business.

“The formula is flawed,” Dr. Hickey said. “We may try to get an injunction for an independent outside examination to see if the risk adjustment formula is in fact stabilizing the insurance market. If it continues without changes, it’s going to wipe us all out.”

Co-ops were an experiment under the health law to infuse competition, lower prices, and insurance markets with a variety of choices for consumers. A total of about $2.4 billion was given in low-interest loans to 23 co-ops.

Co-ops have failed or are being closed down in Colorado, Iowa, Kentucky, Louisiana, New York, Nevada and Tennessee, and Oregon. So far, more than 500,000 customers have lost their co-op coverage, and co-op officials said their demise will hurt competition, leading to higher prices for consumers.

Most of the remaining co-ops are losing money and have lower-than-expected enrollment, according to a recent report by the Health and Human Services Office of Inspector General.

Republicans say it’s doubtful if the federal government will ever recoup the millions of dollars in seed money the startups received.....

The startups have been caught in a financial squeeze. Because they tended to attract younger, healthier people, many were required under the risk adjustment formula to pay fees to help cover the sicker patients who signed up with established carriers.

At the same time, the federal government said this month insurers would get just 12.6% of money they requested from a program known as risk corridors that aims to ease financial risk. That has been a tough financial hit for co-ops and smaller insurers with less financial cushion than commercial insurers.

The failures have left hundreds of thousands of consumers scrambling to find new health insurance coverage. Co-ops were generally low-priced, and many consumers could likely pay higher premiums on new plans and they could also be on the hook for medical bills their failed insurers are unable to cover.

The federal government said it is taking steps to help consumers. “CMS’s priority is to make sure that Marketplace customers have access to quality, affordable coverage through the Marketplaces,” the Centers for Medicare and Medicaid Services said in a statement Thursday. “We are working with Oregon and Colorado officials to do everything possible to make sure consumers stay covered.”

Colorado and some other co-ops have argued they were prematurely shut down by state regulators, and some co-op leaders have also blamed the Obama administration, which they say provided insufficient oversight or wrongly assured them they would get more funding from the risk program. Republicans passed legislation in 2014 that barred the administration from using other money from other federal funds to make up shortfalls.

Insurers had asked for about $2.87 billion in payments based on their 2014 results. But CMS said the pool available to make those payments is just $362 million, which came from collections from other insurers that did relatively well on their marketplace business.

CMS has said it hopes to make payments to cover the shortage as more money comes into the program in later years. Rest of article.


Anonymous said...

The one in Louisiana which was partly owned by a state legislator was a joke from the start. Not a sole who owned/ran the deal had more than a whisper of healthcare insurance experience. They got busy and spent the Feds' seed money like drunken sailors before they ever signed up a beneficiary. Shocking that the state and Feds are having to take it over.

Not all of the ACA was/is bad, but the coops were/are among its worst programs.

Anonymous said...

The idea apparently was to create a new generation of mini Blue Cross type non-profit insurers. Unlike Blue Cross and other non-profits, they never had any capital. All they could do was to pay out claims from the money that came in from premiums and that did not work for long without other sources of revenue. Congress should have written that part of ACA quite differently where it would be a multi year experiment to see if it would work. As it was, they just handed them the keys and told them they were an insurance company.

Anonymous said...

The coops weren't allowed to advertise because the dumbo rats thought advertising is why insurance costs so much

Anonymous said...

Congress should have written that part of ACA quite differently where it would be a multi year experiment to see if it would work.

Congress didn't write Obamacare. Republicans in Congress share no responsibility for the disaster.

Anonymous said...

reubs share alot of the blame as they were all bark and no bite when it came to defeating obamacare

Anonymous said...

When you attempt to solve a set of problems, you always get a new set of problems that will hopefully be easier to fix if you go about problem solving well. No system ever designed has been without flaws.

If you want to find them and focus on them and use them to cast blame, you can easily play that game. Fixing what is broken is better but requires time and energy and thoughtfulness. Criticism and blame is easier but it solves nothing. It is crying over spilled milk and letting the milk stay on the floor and sour.

The bill was nearly identical to the one Bob Dole put forward long ago so if you are silly enough to find the blame game useful, start there!

And ,most of the blame for the health care mess, is thanks to the lame duck Congress that existed just before Clinton took office , it is impossible for Congress to get accurate information. The actual costs of medical care and drugs and drug development is what the industries decide to report to Congress it is. The GAO nor Congress can get any actual cost documents. That lame duck Congress made that information proprietary. It's what those industries wanted and got when they knew the Clinton wanted to look at health care.

Or we can blame Clinton for saying he'd strap on an issue where the lobbyist were too powerful for him not to end up having it made worse.

So we can continue with this partisan BS or we can fix it and have a rational health care delivery system.

But, to do that, requires putting egos aside, obtaining factual information, gaining knowledge about alternatives , and sitting down to reason together to come up with the best we can do with an eye to tweaking and improving as needed.

While interesting, I cannot, from the information in this article determine what the actual problems might be. Several places to look in depth were mentioned, but most of the comments given thus far have little to do with the article and everything to do with opinions that existed before reading it as far as I can tell.

Sadly, we will continue to cast blame rather than fix what is broken and ever sadder, those who know very little but think they know it all, will continue to drive the debate and the policy decisions.

Anonymous said...

My litmus test for descerning someone's intelligence in these discussions is whether they use the word Obamacare.

Anonymous said...

The blame Republicans have is for losing so many seats in Congress during 2006 & 2008 elections. Dems had 60 seats in the Senate- the magic number to make anything happen. Democrats also had about 250 seats in the House (and 3 of 4 in MS). Obamacare aside, it could have been a lot worse looking back.

Anonymous said...

My litmus test for discerning intelligence in these discussions is whether they spell descerning correctly. lol. Obama likes it being called the Obamacare.

Anonymous said...

October 25, 2015 at 10:12 AM said
"So we can continue with this partisan BS or we can fix it and have a rational health care delivery system.

But, to do that, requires putting egos aside, obtaining factual information, gaining knowledge about alternatives , and sitting down to reason together to come up with the best we can do with an eye to tweaking and improving as needed."

That's nice to say after someone crammed something down your throat.

We had a system that worked for the biggest part of the population and the whole thing was scrapped to help a few and get money from people that didn't need insurance. Now the people that used to be able to go out and buy a policy for themselves have to get a one size fits all policy, paying twice the amount they use to, to help pay for ones that can't.

Small tweaking should have happened before this massive change.

"Pass it to find out what's in it." It all started with BS so let the BS end it.

Kingfish said...

8:21: How so?

40 votes is 40 votes in the Senate. The Republicans were locked out of the drafting process. No amendments were allowed. Rules were changed and it was hustled through under reconciliation procedures. The Republicans didn't vote for it. Hell, they had to buy off Democratic Senators just to get it passed.

But hey, we don't want to confuse you with facts.

Anonymous said...

Cut it out Karen. We know it is you. You're hardly non-partisan.

Anonymous said...

I agree that OBAMACARE would have passed but the Repubs didnt even put up a fight. Sure a few did but the establishment repubs worked to shut them down. This is why Trump is getting so much traction. Most repubs have turned out to be rino's so whats the difference in sending trump. This repub melt down started with "Read my Lip Bush" and he quickly flipped on that promise.

Anonymous said...

Tell us 4:05 PM how the Republicans were supposed to stop a simple majority vote in the Senate. Please give specifics. Not defending the RINOs by any means but interested in how the reconciliation vote chicanery could have been stopped.

Anonymous said...

The GOP had an opportunity in the House to participate in reforming health care before the bill ever got to the Senate.

Indeed, that there were efforts to appease the GOP and lobbyists is why contracting with drugs companies like other nations do was taken out and a single payer system was never considered!

The GOP chose instead to play politics and continue to cater to the party crazies.

KF , you just aren't that naïve about how the system works. And, I don't think you've forgotten all the White House meetings and even a golf game or two! I know elections are coming up but really.

Anonymous said...

October 26, 2015 at 5:55 AM = Revisionist history

Anonymous said...

"Congress should have written that part of ACA quite differently where it would be a multi year experiment to see if it would work."

No. Congress should have not written ACA at all. Period. This was 180 degrees in the wrong direction. The way to start getting control of health care costs (And that is what the liar in chief claims this was about. Over and over he said it was to control the costs) is the have people buy their own health insurance and not get it at work. Give them a tax break for buying insurance, let them have a tax free medical savings account. Make them responsible for their own medical care spending. Allow capitalism to work and it will work. Providing health care for the poor is a separate issue. Don't mess up the medical costs of the entire nation because some people need help.

BenBit said...

What 10:07 said...

Anonymous said...

The DEMOCRAT party OWNS Obamacare. Lock, stock and barrel. The Democrats crammed that steaming pile of crap down the throats of the country. They paid off all Democrats that used that as a lever to "bring home the bacon". They threatened, cajoled, bought and they then pronounced how wonderfully proud of themselves they were, along with announcing that those damn Repubs would rue the day that they didn't go along with Obamacare.
If it weren't so freaking pathetic it would be laughable to watch the Democrats run from what they did and try to blame the Repubs.
OWN it Democrats, remind everyone how great a deal it was. Run on it as the main platform for your party.

Anonymous said...

Nobody seems to realize that the poor elect democrats because they don't believe their own party needs to keep them poor and begging, in order to survive. They love the poor and feed their minds with half truths and promises that are so far fetched, that anyone with any common sense, knows will never be successful because SOMEBODY has to pay for it, and it isn't gonna be the democrats. They're usually undereducated, cast votes based on race, live in substandard cities and homes, and are likely the head of a household of illigitimate children. When somebody comes along with AFFORDABLE Healthcare, all you get is bunch of nurse practioners taking over the responsibilities of HIGHLY trained physicians. That's what you call substanard care, But it is change you can count on!

Anonymous said...

The Affordable Care Act (i.e., Obamacare) has been a stunningly successful program. The rate of uninsured Americans has plummeted from around 20% of the population to around 11%. This means that millions of Americans - somewhere around 16 million - are now getting much-needed access to healthcare that they were previously denied. Enrollment targets have been largely met (and exceeded in many places), and healthcare is now affordable for most people. This have improved living standards for a large number of Americans and made them much more healthy. Our grandchildren will have never heard of "pre-existing conditions" and no one will now be denied healthcare. Finally, the ACA is greatly contributing to the slow-down in healthcare spending. All of these are incontrovertible facts.

In the bizarro-world of Jackson Jambalaya, however, this is considered a "steaming pile of crap" that Democrats should be running from, scared to death. Guess what, JJ? Obamacare works, it is a success, and it is here to stay. Suck it.

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