Watchdog group says remaining Obamacare co-ops doomed for failure

Richard Pollock and Ethan Barton

A government watchdog reported Tuesday that the remaining six Obamacare CO-OPs don’t “appear to be financially viable and sustainable.”

That means the $2.4 billion in taxpayer funds awarded by the Obama administration to the 24 original health care CO-OPs is a complete loss.

The Consumer Operated and Oriented Plans, more commonly known as CO-OPs, are nonprofit health insurance providers established under the Affordable Care Act.

Five of the 11 CO-OPs operating on Jan. 1, 2016, had either ceased or planned to cease operations by the end of the year, and the remaining six will likely follow suit based on the analysis of their financial status by the Department of Health and Human Services Inspector General (IG).

“[E]ach of the remaining 6 CO-OPs reported net losses and had drawn down nearly all available CO-OP loan amounts as of December 31, 2016,” the IG said. “These six operational CO-OPs did not appear to be financially viable and sustainable based on the reported net income and available capital and surplus.”

“Medical claims costs exceeded premiums for three of the six CO-OPs,” it continued.

The $2.4 billion loss does not include millions more in losses that individual states will face to cover for CO-OP shortfalls on outstanding payments to doctors, hospitals and medical professionals. In New York state, for instance, the losses to medical providers was reported in excess of $150 million.

Further, hundreds of thousands will discover they have to scramble for new health insurance.

“[M]any of the remaining operational CO-OPs have financial issues similar to those of the CO-OPs that were liquidated,” the report said.

The Centers for Medicare & Medicaid Services placed 10 of the 11 CO-OPs the IG reviewed on “corrective action” or “enhanced oversight plans” in 2015 and 2016.

“CMS conducted the required oversight of the CO-OP program, but this did not prevent the CO-OPs from ceasing or planning to cease operations,” the report said.

“When a CO-OP ceases operations during the plan year, health plan participants can be significantly affected,” the report continued. Participants, for example, “may have to select a new health plan, resulting in possible changes of providers, medications, and medical services and possibly higher premiums and other cost-sharing expenses.”

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