Wednesday, March 11, 2015

My New Favorite Affordable Care Act Story

President Obama, his fellow Democrats and supporters of Government-run health care often complain that the reason the Affordable Care Act remains so unpopular with a majority of Americans is that the "good stories" about the ACA never get much attention.  Today, why don't we learn about a "success story" out of Iowa.

CoOportunity Health is an insurance co-operative founded in the wake of the ACA to provide coverage in the exchanges mandated by the law.  As a co-op, the company is owned by it's customers--a concept that was not common until the ACA created federal subsidies to establish such operations ($145 MILLION for CoOpportunity) and subsidies to its potential customers.  In addition, CoOpportunity didn't use actuarial tables to determine what the rates for its policies should be.  Instead, the organizers wanted to be what they called a "market disruptor"--setting their rates by what they thought was a "fair price" for people to pay for health insurance.  This "fair price" came in much lower than the rates of traditional private insurance companies.

As you might expect, CoOpportunity Health was very popular with Iowa consumers who were looking to buy insurance in the exchange.  In fact, it was so popular that the number of people who signed up for policies was far beyond what the organizers anticipated--but they were very happy that so many people now had "affordable health care".

However, this is where our story takes a turn for the worse.  You see, CoOpportunity's customers tended to be those people who didn't have health insurance before--usually due to a pre-existing or chronic condition.  And those people took advantage of their new, low-cost, generous benefits by going to the doctor--a lot.  So much in fact, that in just nine months of operations CoOportunity was more than $100-MILLION in the red--with no prospect of ever making up that deficit.  What's more, CoOportunity agreed to take on nearly 10-thousand Medicaid enrollees as part of Iowa's expansion of the program--only to find out that the money from Washington wasn't coming anywhere close to covering the cost of those enrollees (is any of this sounding familiar?)  It looked like CoOportunity was going to go out of business leaving hundreds of millions in debt and customers without anywhere else to go for coverage.

But there is a hero in this story.  The brave Taxpayers of Iowa with their magical deep pockets are coming to the rescue.  The state has taken over CoOpportunity's debts and is pumping tax dollars into its continued operation.  While enrollees were encouraged to seek other plans before the registration deadline last month, those who choose to stick with what they have get to pay 19% more in premiums--with the state likely to continue to pick up whatever costs that revenue fails to cover.

So there you go, a very happy ending to another Affordable Care Act "success" story.

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