Nonprofit ObamaCare plans in financial trouble

Most nonprofit “co-op” health insurers set up under ObamaCare are losing money and falling short of enrollment targets, according to a Health Department watchdog report

{mosads}These nonprofit co-op health plans were created under ObamaCare as a compromise after liberals failed to secure a “public option,” a government-run plan to compete with insurers. 

The law ended up allowing the government to make start-up loans to nonprofit co-ops that would compete with the established insurers. 

However, the report released Thursday from the Department of Health & Human Services Inspector General finds that many of these co-ops are struggling. 

Twenty-one of 23 co-ops nationwide were losing money as of Dec. 31, it finds. Furthermore, enrollment is falling below projections for 13 of the 23 plans. 

The report notes that the financial troubles could endanger the repayment of some of the $2.4 billion in loans the plans have received from the Obama administration.

“The low enrollments and net losses might limit the ability of some CO-OPs to repay startup and solvency loans and to remain viable and sustainable,” the report states. 

Kentucky’s co-op, which is faring the worst, lost about $50 million, as premium revenue fell well short of claims expenses. 

On enrollment, Arizona’s co-op, which has fallen the most short of projections, signed up just 869 people, compared to a goal of about 24,000. 

Still, nine plans are exceeding enrollment projections, with New York’s roughly 150,000 enrollees at five times its projection. 

Iowa and Nebraska’s co-op was shut down in February because of financial problems. Likewise, Louisiana’s co-op announced this week it wouldn’t offer coverage next year. 

“As with any new set of business ventures, it is expected that some CO-OPs will be more successful than others, but CMS will continue to actively monitor each CO-OP’s progress, and remains committed to facilitating access to affordable, high-quality health insurance for all Americans,” the Centers for Medicare & Medicaid Services (CMS) told the inspector general in response to the report. 

CMS concurred with the inspector general’s recommendations for strong oversight, and said it had recently increased financial reporting requirements for co-ops. It also said it would use “any and all remedies” under the law to collect debt from co-ops that fail to repay loans.

Meaghan Smith, an HHS spokeswoman, said the department is monitoring co-ops, working with the inspector general, and is in the process of enhancing its criteria on when a co-op is no longer financially viable.

“Like start-ups in a competitive market, CO-OPs may experience short-term ups and down,” Smith said in a statement. “CMS takes its commitment to CO-OP enrollees and the American taxpayer seriously, and is working with these new businesses to help them become an established, sustainable, and affordable option for consumers.”

—Updated at 5:18 p.m.

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