Right-wing media outlets are stoking fears that the Affordable Care Act (ACA) is on the verge of collapse; arguing that health insurance co-op failures threaten to shutter President Obama's signature health care legislation. But experts argue that ACA continues to control health care costs and expand insurance, and explain that the co-op failures are due to underfunding by Congress.
ACA Begins Third Year Of Open Enrollment Amid Concerns
Wash. Post: “Modest Expectations” For Third ACA Enrollment Year. In an October 30 article for The Washington Post, Amy Goldstein noted that the Obama administration was setting “modest expectations” for new enrollments with “insurance exchanges created under the Affordable Care Act ... scheduled to open for a third sign-up season [on] Sunday [November 1]” :
Under the 2010 health-care law, the exchanges were formed to sell insurance to people who do not have access to affordable health benefits through a job. The law also created government subsidies to help people pay for these ACA plans, with the amount depending on an individual's income. Nearly 9 out of 10 people who have gotten this coverage are receiving a subsidy, with enrollment more common among people with relatively low incomes.
The enrollment period that begins Sunday is scheduled to last three months. In 38 states, consumers will rely on HealthCare.gov. The remaining states and the District [of Columbia] have created their own exchanges. [The Washington Post, 10/30/15]
NY Times: 12 Of 23 Insurance Non-Profits Will Stop Coverage In 2016. According to a November 3 article by The New York Times, 12 of the 23 non-profit health insurance co-ops created as a result of the ACA will stop offering coverage in 2016. The article noted recent testimony by Dr. Mandy Cohen of the Centers for Medicare and Medicaid Services about the obstacles faced by the insurance start-ups and a lack of adequate funding from the Republican-controlled Congress (emphasis added):
Congress created the co-ops to increase competition in state insurance markets and to offer additional choices to consumers, with the hope of holding down premiums. Democrats in Congress authorized the co-ops after concluding that they did not have the votes to create a government-run health plan -- the so-called public option -- to compete with private insurers.
Dr. Cohen told Congress on Tuesday that federal officials had not been lax or negligent in supervising the insurance co-ops.
But, she said, the co-ops faced stiff challenges as they struggled to create networks of doctors and hospitals, win the support of consumers, and compete with larger, more experienced insurers. Unlike established insurers, she said, the co-ops had no claims experience on which to base prices for the health plans they sold in the new public insurance exchanges, or marketplaces.
Congress, she said, also played a role, eliminating nearly 60 percent of the $6 billion that Democrats had hoped to offer the fledgling insurers.
Over all, the 23 co-ops have received $2.4 billion in federal loans to help pay start-up costs and to meet state solvency requirements. Dr. Cohen said the government would “use every tool available to recover taxpayer dollars” from the co-ops going out of business, but she declined to say how much she expected to recoup. [The New York Times, 11/3/15]
Right-Wing Media Hype GOP Claims That ACA Faces “Massive Failure” This Year
Fox's Bret Baier: Obamacare Co-Ops Are Collapsing. On the November 4 edition of Courtside Entertainment Group's The Laura Ingraham Show, Fox News anchor Bret Baier discussed the failed co-op in Kentucky as a factor in Republican election victories in the state, and claimed that that more co-ops were likely to collapse in the near future:
BRET BAIER: Kentucky's co-op fell apart over the last month and a half one of 23 Obamacare co-ops, about a third of them have collapsed, and more are expected to. And Bevin jumped on that and made it a national issue and it kinda, Laura, is a microcosm for what Obamacare could be in 2016. With rising premiums and concerns about how people are getting covered and these co-ops failing.
LAURA INGRAHAM (HOST): Fantastic very interesting in the Obamacare reverberations through politics and electoral politics cannot be understated as the health of this overall program is now being questioned because of all the closures of the health providers under Obamacare. Great to talk to you Bret Baier. [Courtside Entertainment Group, The Laura Ingraham Show, 11/4/15]
Fox's Kevin Corke: “Massive Failures Of So Many Co-Ops” Could Leave Taxpayers “On The Hook.” On the November 4 edition of Fox News' America's Newsroom, White House correspondent Kevin Corke hyped concerns raised by Republican lawmakers that the failure of several insurance co-ops set up by the Affordable Care Act could leave taxpayers “on the hook for an awful lot of money” :
KEVIN CORKE: It's a huge problem and, unfortunately, appears to be getting worse by the month. And now there are two GOP lawmakers who are asking for answers to this question: How is it that over half of the so-called, non-for-profit health insurance co-ops, funded by taxpayers by the way as a result of Obamacare, now announcing that they will not offer coverage next year? They simply want to know how in the world could that happen? New York Times reporting that it's 12 of 23. I want to show you part of a letter sent to the administration by Senators Orrin Hatch of Utah, and Lamar Alexander of Tennessee. Now, in their note they say a couple things, and I think this is also instructive. They talk about that money that you just mentioned. More than $2 billion dollars “in federal startup and solvency loans have been paid to co-ops. Massive failures of so many co-ops raise concerns about how an Affordable Care Act program that was designed to increase competition is somehow failing to do so.” And so they want to know what happens-- what has happened quite frankly, Martha, and what happens now. And unfortunately it looks like all of us, the taxpayer, could end up on the hook for that money.
Okay, well maybe it's not blowing up deficit, maybe working for some but clearly broad brush, Martha, it is not working for everyone and the taxpayers could really be on the hook for an awful lot of money. [Fox News, America's Newsroom, 11/4/15]
Fox's Marc Siegal: Co-Op Failures Are A “Symptom For The Larger Disease,” Obamacare Is Headed Toward A “Death Spiral.” On the November 4 edition of Fox News' Outnumbered, contributor Dr. Marc Siegal claimed that the failure of several insurance co-ops was a “symptom for the larger disease, which is that Obamacare was never as promised” and is headed toward a “death spiral” because young people are not enrolling in large enough numbers:
MARC SIEGAL: I think of this as the symptom for the larger disease, which is that Obamacare was never as promised because, the co-ops were supposed to be a cheap alternative, Sandra [Smith]. They were supposed to be -- if you couldn't afford the exchanges, here's a co-op, the premiums will be lower, the Feds will subsidize it, $2.4 billion dollars have gone into these co-ops, over half of them are closing, which puts tremendous pressure on the states, by the way, to bail out those who have been dropped.
This is exactly the point I was about to make, the Millennials are smarter than that. You guys are not signing up. There's 10 million out there that were supposed to sign up, that have not signed up. They are going without the insurance. They'd rather pay the penalty, or they are finding private insurance outside of Obamacare. The idea that you are going to pull the cart of the older people that have diabetes, and all the heart disease, and medical problems that are costly. It ain't happening, you're smarter than that, and it is going to be the death spiral for Obamacare because prescription drugs and other treatments are so expensive. [Fox News, Outnumbered, 11/4/15]
NRO's Williamson: “It Was Obvious From The Beginning That... These Co-Ops Wouldn't Be Economically Viable.” In a November 4 column for National Review Online, Kevin Williamson claimed “the so-called Patient Protection and Affordable Care Act (ACA) has failed,” pointing to the failure of health insurance co-ops, which he claimed were doomed from the start:
It was obvious from the beginning that if Obamacare's perverse incentives created insurance pools that were older and sicker rather than younger and healthier, these co-ops wouldn't be economically viable: You need lots of young, healthy insurance subscribers to offset the costs associated with your older, sicker subscribers. 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. [National Review Online, 11/4/15]
But Experts Explain Co-Ops Failed Due To Unexpected Cuts In Startup Government Funding
PBS: Health Insurance Co-Ops Failed Because Their Funding Was Cut. In an October 30 interview with PBS News Hour, Kaiser Heath News' Mary Agnes Carey explained why certain Obamacare co-ops had failed, noting that “the funding for co-ops was cut” , and that many co-ops “expected a much more generous payment from the administration” :
MARY AGNES CAREY: In a budget deal a few years ago, the funding for co-ops was cut. There recently was an announcement from the Department of Health and Human Services, they could not give these insurance companies and others as much as anticipated, to help offset some of the higher cost cases. And that's where some of the co-ops go into trouble. Some of them are very popular, they were low-cost alternatives that meant sometimes that sicker beneficiaries came to them, and that's where some of the financial problems happened.
JUDY WOODRUFF (HOST): Explain again, Mary Agnes, why a number of these co-ops just didn't make it.
CAREY: They had basically had solvency issues, financial solvency issues. If they were the lower price point, that tended to attract sicker beneficiaries. That would drive up their costs. They had anticipated fairly large payments from the federal government, to help offset the costs of those sicker folks. We, but of course as we mentioned earlier, that there was a change in -- their funding was cut early on, in the inception of the co-ops. And then secondly, there was another legislative change that adjusted the amount of money that the federal government could pay them. It's a program that says if you have a lot of healthier beneficiaries, you pay in -- and that is, the insurers pay in, and that money is distributed to the insurance plans that take care of the sicker folks. The insurers, including many of these co-ops, expected a much more generous payment from the administration they're receiving, and that has hurt their bottom lines. [PBS, PBS News Hour, 10/30/15]
NY Times: Co-Ops Were Created As Weak Alternative To Option Blocked By Republicans. In an October 20 editorial, The New York Times editorial board wrote that critics of Obamacare's failed co-ops “neglect to mention that the nonprofit plans, known as health insurance cooperatives, were created as a weak, underfunded alternative to a much stronger option that the Republicans blocked from passage.” The editorial board noted that while a much stronger “public option” had been proposed, “it became clear that no public plan could survive a Republican filibuster,” leading Sen. Kent Conrad (D-ND) to set up “these cooperatives to compete with the profit-making plans” :
Back in 2009, while the reform law was being debated in Congress, most Democrats were pushing for a so-called public option, a government-run plan that consumers could choose as an alternative to private insurance. Such a plan would not have to generate profits and would have stronger bargaining powers to obtain discounts from health care providers, enabling it to charge lower premiums than private plans.
When it became clear that no public plan could survive a Republican filibuster, Senator Kent Conrad, a North Dakota Democrat, proposed setting up these cooperatives to compete with the profit-making plans. They, too, were presumed able to charge lower premiums because they would not have to earn profits. The co-op provision was included in the reform law enacted in March 2010.
Their problems have been attributed to wrong estimates for how many people might enroll and to setting premiums too low to cover the cost of care, as well as severe reductions in the amount of money available to the co-ops from federal loans and for risk adjustment payments, both the result of Republican opposition to supporting the plans.
The overriding problem was the difficulty in setting up the co-ops from scratch to compete against entrenched insurance companies with deep pockets. Still, with capable management and adequate funding, nonprofit cooperative plans can succeed for patients and providers. Group Health Cooperative, based in Seattle, has been in business for 70 years. It provides coverage and care for around 600,000 people in Washington and Idaho.
Republicans and other critics have been trying for four years to destroy health care reform. Three years ago the Supreme Court rejected their efforts to declare the health care reform law unconstitutional and this past June it rejected their attempt to invalidate subsidies to help buy insurance on the federal exchange used by most states.
Now they are after smaller game, the co-ops. The Obama administration should see if there are ways to buttress the remaining co-ops financially. Even if some of the co-ops close, their enrollees will be able to find other sound health coverage thanks to the reform law Republicans were unable to repeal. [The New York Times, 10/20/15]
ACA Still Continues To Control Costs, Expand Insurance
Kaiser Family Foundation: Weighted Average Premium Increase Just 3.6 Percent Nationwide. According to an October 27 analysis by the Kaiser Family Foundation of benchmark projected insurance premium increases for 2016 in 50 major cities, “the weighted average increase is 3.6% across these cities” before accounting for available tax credits. The analysis noted that the projected 2016 increase was higher than last year, when weighted premiums actually decreased by 0.3 percent, but after accounting for tax credits the average benchmark consumer still witnessed a slight premium decrease (0.7 percent) from the previous year. [Henry J. Kaiser Family Foundation, 10/27/15]
Commonwealth Fund: Average Annual Premium Increases Soared In Years Before Obamacare. According to a June 2014 report by The Commonwealth Fund, average premium increases in 2008, 2009 and 2010 were considerably higher than the average expected for 2016. In the three years prior to the enactment of Obamacare, health insurance premiums for so-ca increased by an average of 10.9 percent, peaking at 11.7 percent in 2010:
[Commonwealth Fund, June 2014]
Gallup: Uninsured Rate For Third Quarter Of 2015 Remains Near All-Time Low. According to the most-recent Gallup-Healthways Well-Being Index survey, the percentage of American adults without insurance was just 11.6 percent from July through September of 2015. That rate represents a marginal increase from the prior quarter, when uninsured rates reached their lowest point in the history of the survey (11.4 percent):