Yesterday, the Ohio Department of Insurance announced it was closing InHealth Mutual, one of Obamacare’s Consumer Operated and Oriented Plan (CO-OP) programs, which was created with more than $129 million in taxpayer dollars to provide health insurance. Nearly 22,000 Ohioans now find themselves losing their health plan with a short amount of time to find a new option. And news reports reveal InHealth lost $80 million last year despite being under “enhanced oversight” by the federal government.
On the shuttering, Ways and Means Health Subcommittee Chairman Pat Tiberi (R-OH) said:
“Thanks to the failure of Obamacare’s CO-OP health programs about 22,000 Ohioans will be forced to seek new coverage. It is unacceptable. My constituents deserve certainty, not programs that crumble and implode under their own weight.
“In the coming weeks, our conference will release our agenda for an innovative and free-market approach for high quality and more affordable care—one that will actually lower costs, increase choice and strengthen health care security for seniors and those that need it most.”
The CO-OP program was created under Obamacare to establish federally-backed non-profit insurance companies, a nod to supporters that wanted a public option. But the program – just like the President’s health care law – was doomed from the start because it forced the federal government to loan billions of taxpayer dollars to “start up” companies that had no experience delivering health insurance.
Even supporters of the law doubted the ability of CO-OPs to control costs, warning, “…[CO-OPs] don’t make sense for health insurance.” The program was designed with intrinsic flaws that forced many to develop a misguided business model that overestimated enrollment numbers and underestimated insurance costs.
InHealth Mutual is just the latest example of CO-OPs that have failed:
- The first CO-OP to fail was CoOportunity Health, which served beneficiaries in Iowa and Nebraska, and went into liquidation in February 2015.
- In July 2015, Louisiana Health Cooperative announced it would be closing.
- In August 2015, Nevada Health CO-OP announced to its 14,000 subscribers that it too would close by the end of 2015.
- In September 2015, New York State told Health Republic Insurance of New York to stop writing new policies and to shut down operations.
- In October 2015, seven CO-OPs announced closures: Kentucky Health Cooperative, Tennessee’s Community Health Alliance, Colorado HealthOP, Oregon’s Health Republic, South Carolina’s Consumers’ Choice Health Insurance, Utah’s Arches Health Plan, and Arizona’s Meritus Health Partners.
- In November 2015, Michigan’s Consumers Mutual announced its exit.
Despite more than $129 million in loans from the federal government, Ohio marks the 13th failed CO-OP created under Obamacare. As Rep. Adrian Smith (R-NE) wrote in the Wall Street Journal after the 11th CO-OP closed:
“[The CO-OPs] have collapsed despite federal startup loans totaling more than $1.1 billion. These loans will likely never be fully repaid, while insurers and consumers will be on the hook for any unpaid claims left behind by failed insurers.”