23 21 19 18 17 15 14 13 12 CO-OPs offering plans in 25 22 20 19 18 17 16 15 14 states

There’s currently a lot of talk about Obamacare heading into a “death spiral,” which most of Ricochet’s readership predicted before Barack, Nancy and Harry whipped, bribed, and bamboozled a Democrat-led Congress to drag ACA across the reconciled finish line.

National Review’s free market proponent Kevin Williamson wrote a great article “Obamacare is Dead” which is being joyfully retweeted among the conservative Twitterverse.

The fact is that Obamacare has fallen apart without Republicans’ dismantling it. Almost all of its basic promises have failed, it is an economic shambles, and it is a political mess: Unsurprisingly, people still don’t like it. Less than a third of Americans support the individual mandate, three-fourths oppose Obamacare’s tax on high-end health-care programs, and more voters oppose the law categorically than support it. A quarter of voters say the law has hurt them personally.

I am personally in that quarter of voters and documented it in my very first post here on Ricochet.

Williamson also points to the CO-OP failures which are the raison d’être of the current news about Obamacare’s demise.

Many of us — myself included — assumed that the federal government under President Obama would simply write these co-ops huge checks to keep them afloat. We were half right: The government is writing them huge checks, but they are failing anyway, so fundamental is their economic unsustainability.

What President Obama and the ACA proponents didn’t predict was the 2014 cRomnibus spending bill requiring the CO-OPs to be “budget neutral.” This was a major deathblow to the CO-OPs and shows how Congress can effectively use the power of the purse (reminder to Paul Ryan).

Now there’s news that, depending on who you believe, Obamacare (sorry Nancy, I will always call it Obamacare, not the ACA … he owns it) premiums are about to increase from 7.5 percent to 20.3 percent.

The great thing about Twitter is getting instant responses from people when you have a question. I asked Louise Norris from HealthInsurance.org and The Colorado Health Insurance Insider (who represents herself as “Focused on healthcare reform and Medicaid expansion”) about the CMS 7.5 percent estimated increase in Obamacare premiums, and why the Daily Caller stated it was really a 20.3 percent increase in premiums (because the stats used were primarily Silver Plans, not the rest of the metals).

From Monday’s Daily Caller:

Obamacare premium costs will soar 20.3 percent on average in 2016 instead of the 7.5 percent increase claimed by federal officials, according to an analysis by The Daily Caller News Foundation.

The discrepancy is because the government excluded price data for three of the four Obamacare health insurance plans when the officials issued their recent forecast claiming enrollees would face only a 7.5 percent average rate increase in 2016.

Norris pointed me to Charles Gaba‘s article countering Daily Caller. But when you read the article it shows not a 7.5 percent increase in premiums but a 12-13 percent increase. The muddy justification was that the DC article looked at the full ACA-compliant individual market, including off-exchanges. In other words, not the laser-focused, benchmark specific numbers the ACA proponents want you to look at, but all the numbers. They only wanted to include 25 percent of the plans. Selective accounting or fuzzy math, this is the way reporting is now done in the Beltway. Either way, premiums are skyrocketing.

So how does this effect the CO-OPs and just what is a CO-OP anyway? From Louise Norris’ own HealthInsurance.org:

Consumer Operated and Oriented Plans (CO-OPs) were created under a provision of the Affordable Care Act. CO-OP plans were proposed by Senator Kent Conrad (D-ND) when the original  public plan option was jettisoned during the health care reform debate. Lawmakers added the CO-OP provision to the Affordable Care Act to placate Democrats who had pushed for a government-run, Medicare-for-all type of health insurance program.

At the time, progressives who preferred a public option derided CO-OPs as a poor alternative because they can’t utilize the efficiencies of scale that would come with Medicare For All, nor do they have the market clout that a single payer system would have when negotiating reimbursement rates with providers.

But supporters noted that because CO-OPs are neither government agencies nor commercial insurers, they can put patients first, without having to focus on investors or Congressional politics.

Instead of paying shareholders, CO-OP profits are reinvested in the plan to lower premiums or improve benefits (in 2014, only one CO-OP, Maine Community Health Options, had revenue that exceeded claims and administrative expenses – but the reinvestment of profits is the plan for all CO-OPs, once they become profitable).  And customers’ health insurance needs and concerns become a top priority because the CO-OP’s customers/members elect their own board of directors. And a majority of these directors must themselves be members of the CO-OP.

CO-OPs are private, nonprofit, state-licensed health insurance carriers.  Their plans can be sold both inside and outside the health insurance exchanges, depending on the state, and can offer individual, small group, and large group plans.  But they’re are limited to having no more than a third of their policies in the large group market (a more lucrative market than individual or small group).

Lawmakers had originally planned to provide $10 billion in grants to get the CO-OPs up and running in every state. But insurance industry lobbyists and fiscal conservatives in Congress succeeded in reducing the total to $6 billion, and turning it into loans – with relatively short repayment schedules – instead of grants (and CO-OPs are not permitted to use federal loan money for marketing purposes). Then, during budget negotiations in 2011, those loans were cut by another $2.2 billion.  And in 2012, during the fiscal cliff negotiations, CO-OP funding was reduced even further – and applications from 40 prospective CO-OPs were rejected.

Ultimately, the Centers for Medicare and Medicaid (CMS) awarded about $2.4 billion in loans to 23 CO-OPs across the country (there were 24 CO-OPs, but Vermont Health CO-OP never became operational. CMS retracted their loan in September 2013 – before the exchanges opened for the first open enrollment – because there were doubts that the program could be viable with Vermont’s impending switch to single-payer healthcare in 2017; ironically,Vermont pulled the plug on their single payer vision in late 2014).

The Obamacare cheerleaders (MSM) are taking note, and although they are putting the onus on the Republicans, they have no answer for the failure of the largest entitlement program in generations.

New York Times:

Co-op customers will be able to shop for insurance sold by other carriers in the three-month open enrollment period that began Sunday and continues through Jan. 31.

Daniel R. Levinson, the inspector general at the Department of Health and Human Services, said in July that most of the co-ops were losing money and falling short of their enrollment goals. But the administration expressed confidence in the program at that time, saying the co-ops “may experience short-term ups and downs,” like start-ups in any industry.

In a separate initiative, the administration said on Tuesday that it would hold a forum on the high prices of some prescription drugs.

Sylvia Mathews Burwell, the secretary of health and human services, said the conference, scheduled for Nov. 20, would seek ways to speed the discovery of innovative drug treatments while making them more affordable.

Squirrel alert! Don’t worry about the collapse of our only first-term achievement, let’s talk about high prescription prices, which will ultimately need another government program.

So, the CO-OPs are closing. Premiums are going through the roof. Higher deductibles are requiring the insured to learn the art of negotiation for cash prices, and this is before the hammer drops on the Employer market.

Is Obamacare dead? Not quite yet, but doctors are standing by with the defibrillator. Let’s hope they still take insurance.