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article imageAnother Obamacare co-op bites the dust, leaving six remaining

By Karen Graham     Sep 13, 2016 in Politics
Health Republic Insurance of New Jersey is folding after the state's insurance commissioner put the Obamacare co-op in "rehabilitation" over its "hazardous" financial condition.
Health Republic had a liability of $46.3 million under the Affordable Care Act’s (ACA) risk adjustment program, according to the New Jersey Department of Banking and Insurance.
Basically, the risk adjustment program serves as a mechanism that prevents insurance companies from picking the healthiest members by spreading the insurance risk over all the ACA exchange enrollees.
“Despite our hard work and growing customer base, the unfortunate necessity of complying with the [Affordable Care Act’s] risk adjustment mandate has put the company under considerable financial strain,” said Tom Dwyer, the co-op’s CEO, according to Fox News.
The closing of the insurance co-op will leave 35,000 customers without medical insurance, forcing them to find another insurer by 2017. All this has happened, despite the co-op being awarded federal funds amounting to $107.2 million in 2012 and an additional $1.9 million in 2013.
Health Republic is the 17th co-op to collapse, joining two co-ops in Oregon, one each in Illinois, Connecticut, Arizona, Colorado, Kentucky, Michigan, Nevada, New York, Ohio, South Carolina, Tennessee, Louisiana, and Utah, as well as a co-op that served both Iowa and Nebraska. This leaves only six state co-ops in existence out of the original 23 that were created under the ACA.
What in the devil happened?
According to a very lengthy report (63-pages) by Republicans on the House Energy and Commerce Committee, the remaining Obamacare state exchanges are struggling financially and will all end up folding in a couple years, according to The Hill.
First of all, all of the state exchanges are still relying on federal monies to operate, something that was not supposed to happen. According to the ACA mandate, after the first two years of being under the ACA umbrella, the state exchanges and co-ops should have been self-sufficient.
States have received a total of $4.6 billion in federal grants to launch their own exchanges, according to the report. One problem the committee found was the self-serving actions of the Centers for Medicare and Medicaid Services (CMS). CMS has been "tweaking" its grant funding rules to help states with their operational expenses, even though the grants were originally meant to be for "setting up the exchanges."
Worse yet, despite all the hoopla, ACA enrollment has not been meeting its quotas. So what was all the money they were given being used for? Well, the report is quite detailed, going state-by-state and pointing out the often illegal use of federal funds for everything but what they were intended.
“It is likely that the remaining [state-based exchanges] will eventually opt out of running their own [state-based exchanges] as well,” the report states. In conclusion, the report states: "This failed experiment illustrates that big government, with unlimited budgets and no accountability, does not serve the American people’s interests or wallets. After six long years, the federal taxpayer should no longer be on the hook."
More about Obamacare, new jersey coop, risk adjustment, Affordable Care Act, state exchanges
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