ACA Co-Ops Dropping Like Flies
4th November 2015
Michigan’s Consumers Mutual Insurance put a notice up yesterday that it will not offer insurance in 2016, making it the 12th ACA co-op to fall—a number that’s more than half of the 23 co-ops set up by the ACA in 2014.
But, but, but, I thought that these co-ops would save everybody from expensive health care!
Democrats, of course, have blamed Republicans for cutting federal funding to co-ops, which they argue could have kept them afloat. But the structural causes of the closures appear to lie deeper. Every co-op’s financial situation is unique, but in the case of one early closure—Iowa’s Cooportunity Health—premiums were set too low to cover the cost of the sick patients it attracted. Another threatened co-op, meanwhile, looked at the possibility of raising premiums. In other words, there is a tradeoff between plan affordability and insurer sustainability that the ACA simply hasn’t solved. Insurers can make their coverage affordable, but then their viability is threatened. Or they can raise premiums and save themselves—but at the cost of increasing the financial burden placed on Americans, whether directly or through tax dollars.
Guess not.