The fate of a network of alternative “co-op” health plans started under ObamaCare remains uncertain going into 2016, after half of them collapsed amid deep financial problems.
The co-ops are government-backed, nonprofit health insurers propped up with over $2 billion in taxpayer loans. Twelve of the 23 co-ops established under the Affordable Care Act, though, have gone or are expected to go under by the end of the year, leaving customers who used them scrambling for coverage and taxpayer money at risk.
But, as lawmakers on Capitol Hill demand answers on what’s being done, the Obama administration is offering few predictions on the program’s future other than to say no more money will go toward new co-ops. As to whether that future will crystallize next year, a top federal health official said: “It’s impossible to say right now.”
Kevin Counihan, insurance marketplace CEO at the Centers for Medicare and Medicaid Services, described the co-op failures and other changes as simply “inevitable” in the health care industry.
“Things change,” Counihan told Fox News. “There is a natural ebb and flow to this business. You see this in start-ups in all industries, and it’s also true in health care.”
The answer may not satisfy lawmakers worried about the unrest caused by the co-op failures, and the taxpayer money at stake. But as for what comes next, analysts suggest it could take another year before anyone knows whether the remaining co-ops can survive or not.
“This was a fairly risky exercise to begin with,” Ed Haislmaier, senior research fellow in health policy at the Heritage Foundation, told Fox News.
According to Haislmaier, it is possible other co-ops fail in the near term, but he doesn’t expect more announcements before next fall – since state regulators already moved against the weakest co-ops before the current enrollment season, giving consumers a chance to pick a new plan.
“State regulators have gone through a process, to review and shut down co-op programs that were too weak to continue for another year,” he said. “… It explains why you saw a big bunch of them announce they were closing in October – because it was the drop dead [date]. If you’re going to pull the plug, October was the time to do it.”
The most immediate question may be whether the loan money – which was for start-up and reserve funds – will be repaid.
Tarren Bragdon, CEO of the Foundation for Government Accountability, said he doesn’t have high hopes for that. And he voiced concerns about consumers left seeking coverage on the exchanges.
“As the dust settles, we see the people who are being hurt the most are those whose health care was being provided by these artificially affordable plans,” Bragdon told Fox News. “Now, they will have to face the nightmare of HealthCare.gov or one of the crumbling state exchanges for a new plan for which premiums are averaging double-digit increases.”
Counihan, though, said they’re working to make sure consumers do not see a “coverage gap.”
“It is our primary importance that consumers are protected, consumers are given options, and consumers do not have a gap in coverage. That’s why you see these co-ops winding down in the fourth quarter – so the American people have coverage until the end of the year and new coverage starting on January 1st,” he said.
According to CMS, nine of the closing co-ops will be operating under the federal HealthCare.gov, and the agency plans to help those consumers to “shop and compare” plans.
“It’s not like people don’t have the choice to shop and compare for the best deal,” he said.
But other states with closing co-ops -- like New York, Kentucky and Colorado -- all operate on their own state-based exchange, which would likely absorb the co-ops’ ex-customers.
In Colorado, for example, Connect for Health Colorado opened in October of 2013 as the state exchange and will now take the co-op customers. “We have a lot of options for them,” Luke Clarke, spokesman at Connect for Health Colorado, told Fox News, referring to the roughly 80,000 consumers who will need to shop for new insurance after the-co-op flop.
“We are proud to work with these people who need to shop for new coverage, and roughly half of the consumers are already existing customers of ours,” Clarke said.
Both Counihan and Haislmaier – though on opposing sides of the issue – agree that the creation of future co-ops does not appear in the cards.
“There isn’t any money left in the program to create new co-ops, but the co-ops that are succeeding will have expansion opportunities,” Counihan said. “These are businesses that are responding to the unique pressures of their respective markets.”
According to CMS, the co-ops were implemented to add more “choice and competition” for consumers. But while ObamaCare supporters blamed Congress for the failures to date, Haislmaier says the co-ops are at fault.
“I would place most of the blame on the management of the companies because they were counting on money that was uncertain to begin with,” Haislmaier said, referring to faulty enrollment estimates. “The companies that counted their chickens before they hatched got into trouble; the ones that did not, didn’t get into trouble.”