Government officials are shutting down a nonprofit health insurer in New York set up under ObamaCare because of its financial struggles, the latest blow to the healthcare law’s nonprofit plans.
State regulators and the federal Centers for Medicare and Medicaid Services announced on Friday that they are winding down the co-op operations of the insurer, called Health Republic.
“Given Health Republic's financial situation, commencing an orderly wind down process before the upcoming open enrollment period is the best course of action to protect consumers,” Anthony Albanese, New York’s acting superintendent of financial services, said in a statement.
ObamaCare’s next sign-up period begins Nov. 1.
Health Republic is the fourth nonprofit insurer to shutter, and a Department of Health and Human Services (HHS) Inspector General report in July suggested that financial problems are widespread.
Republicans have pointed to the problems with co-ops as evidence of larger problems for ObamaCare. “ObamaCare’s Co-Op Debacle” is the title of a February report from the Senate Republican Policy Committee, warning that taxpayers could lose money given out in loans to the insurers.
HHS spokesman Ben Wakana said in a statement that co-ops have played an "important role" in increasing competition in the health law's marketplaces.
However, he added "as a startup business, we recognize not all will succeed."
"If a CO-OP has solvency issues, and we cannot rule out that others may this year, we will work with the states so that consumers have affordable options on the Marketplace," Wakana said.
The nonprofit co-op health plans were created under ObamaCare as a compromise after liberals failed to secure a government-run plan to compete with insurers.
The law ended up allowing the government to make startup loans to nonprofit co-ops that would compete with the established insurers.
Twenty-one of 23 co-ops nationwide were losing money as of Dec. 31, the inspector general report found. Furthermore, enrollment was falling below projections for 13 of the 23 plans.
The report noted 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.
This story was updated at 5 p.m.