MONTGOMERY, Ala. — While Alabama has stood firm against enacting any of the voluntary portions of ObamaCare, several other Republican-led states have embraced what they coined as “free money” from the federal government, expanding Medicaid and setting up state-based exchanges.
This week two southern states who had set up non-profit “Consumer Operated and Oriented Plans” or co-ops, to offer subsidized health insurance under the law announced they were shuttering their services, leaving tens of thousands without coverage.
The Kentucky Health Cooperative will leave 51,000 Kentuckians without insurance, while the Tennessee Community Health Alliance—the Volunteer State’s 6th co-op to flounder—will leave 27,000.
Forbes estimates that as many as 400,000 Americans have lost or will lose their coverage this year due to co-op insolvency—so far.
Since organizing, Kentucky’s co-op had been awarded $146.5 million in taxpayer-funded loans, including $65 million in solvency funding as recently as November of 2014. Seeing that premiums and loans were not enough to keep them afloat, the co-op requested and received a 20 percent premium increase for 2016, but that it wasn’t enough.
After a “risk corridor program,” which gives co-ops more money if their populations turn out sicker or more expensive than expected, didn’t provide them with what they needed to survive, the Kentucky Health Cooperative decided to close.
“Barely a week goes by that we don’t see another harmful consequence of this poorly conceived, badly executed law,” said Senate Majority Leader Mitch McConnell. “Despite repeated Obama administration bailout attempts, this is the latest in a string of broken promises with real consequences for the people of Kentucky who may now be losing the health insurance they had and liked twice within the last three years because of Obamacare’s failures.”
Tennessee’s co-op lost $22 million in 2014, and will close despite receiving approval for a 40 percent premium increase.
In total, taxpayers have lost $876 million in loan money that was intended to last 15 years.
These examples unfortunately aren’t unique. A recent paper by the American Enterprise Institute estimates that all but one of the currently operating co-ops are in the red this year.
Alabama did not set up any co-ops, with private insurers opting instead to offer ObamaCare-compliant plans on the federally-run exchange, shielding itself from this sort of situation. Similarly, the state has refused to expand Medicaid, turning down temporary money for a chance to make the program more workable in the long-term.
While ObamaCare is collapsing under its own weight, thousands of people across the country will be the victims of unkept—and likely unkeepable—promises.
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— Elizabeth BeShears (@LizEBeesh) January 21, 2015
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