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October 16 2015

House of Falling Cards: Two More ObamaCare Co-Ops Collapse

Patrice J. Lee

Tennessee’s Community Health Alliance, a 29,000 member state-based healthcare co-op created to provide “competition” in the marketplace, just collapsed after the company recognized that it was in dire financial straits that wouldn’t be improved. Last year, Tennessee’s co-op became the only one in the country to stop signing up new customers because of technical issues. Meanwhile, it hiked rates by 44 percent.

State officials were given staunch warnings about Community Health’s financial issues, including that they were failing to pay agents and brokers, as well as about patient complaints and the state heeded those warnings. Tennessee joins Kentucky, which also announced less than a week ago that it decided to close its doors due to money woes.

Kentucky Health Cooperative announced that it would stop serving its 51,000 members at the end of this year because it couldn’t overcome staggering losses and had trouble paying out claims. Last year those losses amounted to $50 million but reportedly slowed to $4 million in the first half of this year. However, the Administration is shutting off the spigot of federal tax dollars to all of the exchanges and co-ops to help pay for older, sicker customers.

Facing unpayable bills, Kentucky and Tennessee join Louisiana, Iowa, New Hampshire, and the biggest co-op New York in shutting their doors. Colorado is teetering on the brink of closure.

Officially one third of ObamaCare co-ops are dead. The Administration spent $2.4 billion to set up these shuttering and shuttered co-ops. The closures are sending about 400,000 Americans in nearly a dozen states scrambling for new coverage next year or face a hefty tax penalty.

The Daily Caller explains:

Including Colorado, taxpayers have lost $876 million in loan money that was supposed to last for 15 years. The failed co-op’s existed for only two years before suddenly closing their doors.

More co-op failures are expected. “There will be more closures,” said American Enterprise Institute resident fellow Thomas Miller, a health care expert. “The only question is when rather than whether.”

The Center for Medicare and Medicaid Services, which funded the co-ops, said this summer that six co-ops were under “enhanced oversight” because of poor financial reports.  The Daily Caller reported in August that federal officials refused to identify the six that are in trouble.

The Inspector General of the U.S. Department of Health and Human Services reported in July that 21 of 23 operating co-ops faced staggering losses, some greater than the loans that were expected to last 15 years.

Miller said many state commissioners are asking, “do you cut your losses now or do it later? There’s a lot of apprehension among state regulators in terms of signing up for another year in light of results that have happened.”

As the Examiner explains, these ObamaCare co-ops were doomed from the start:

But the co-ops have been plagued by financial troubles since they went online. Co-ops received more than $2 billion in federal funding as of December 2014.

The Centers for Medicare and Medicaid Services wrote to the co-op called Community Health Alliance in late September with concerns about its financial viability.

The problem is one experienced by several co-ops, which initially offered lower premiums that drove people to enroll. However, the insurance startups didn't have enough money to pay off medical claims, leading to financial troubles.

Once again we see that President Obama’s signature "achievement" is a house of cards that requires a lot of federal tax dollars as the invisible support structure against collapse. We taxpayers doled out $362 million to insurers to help cover the costs of older, sicker Americans because not enough young, healthy Americans fell for the ObamaCare scheme. Now, states are grappling with the impact.

As we report today, the Administration is predicting enrollment for 2016 is going to fall quite short of estimates from the CBO and even their own. Good luck luring young people into what is essentially a bad deal for us as we pay more and receive less quality care.

Forget a death by a thousand cuts, ObamaCare will be a victim of its own failure.

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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