A taxpayer-subsidized Obamacare insurer in Iowa has gone belly up. The company started in 2013, but as of now it’s insolvent and does not have enough available funds to guarantee that it can pay for claims from its 120,000 customers. As The Daily Caller’s Sarah Hurtubise reports:
CoOportunity Health is Iowa’s insurance cooperative — a nonprofit insurance company created by the Affordable Care Act to supposedly undercut the large, for-profit insurers that Democrats castigated as “greedy” and “evil” during the debate over health care reform. …
The federal government’s Obamacare administrator the Center for Medicare and Medicaid Services initially gave CoOportunity a $112 million loan award in Feb. 2012, but doled out an additional $32.7 million emergency award to keep the company solvent in September of this year.
That wasn’t enough to keep it in business. CoOpportunity’s management expected to receive more federal money than they did, putting them in continuing financial peril.
The core argument in favor of a government-run, single-payer insurance system was that private insurance companies were too expensive to provide affordable coverage for low- and moderate-income Americans. Turns out, taxpayer-financed, government-run insurers aren’t such a bargain after all, as Hurtubise continues:
The nonprofit insurers were single-payer advocates’ answer to private insurance companies, which some argued hiked premiums just to pad their profits. But after its initial year of Obamacare, CoOportunity was struggling so much that it ended up having to up its premiums in Iowa by 19 percent on average.
But Omabamare insurer insolvency isn’t limited to Iowa:
[CoOportunity’s] far from the only Obamacare-created company that’s in peril. The Obama administration handed out almost $3 billion in loans to get the co-ops started in 2013. They were included in the law to placate critics on the left who advocated a public insurance option and lost.
In Sept. 2014, the administration handed out another round of solvency loans to a number of co-ops who needed help staying in business. Six state co-ops received a total of almost $268 million in extra loans to help keep the companies solvent and in business.
Even since then, the administration issued two last-minute solvency loans, which it kept quiet for weeks. Kentucky Health Cooperative received an extra $65 million emergency solvency loan days before the second open enrollment period launched and the co-ops began to sign up new customers — but CMS did not announce the loans until Dec. 15, along with another last-minute $23 million solvency loan to Wisconsin’s Common Ground Healthcare Cooperative
Elsewhere Hurtubise reports an ironic twist: under the Obamacare exchanges business is booming for the big insurance companies, which are offering lower premiums to a larger customer base.
The Obamacare experience underscores that free markets, not government monopolies, have the dynamism and innovation to offer goods and services of higher quality at a lower cost. In the end, competition, not government constraints, introduces powerful pressure to perform or suffer the consequences for doing a poor job.