Here’s some new and different news. Just kidding. It’s not new at all, it’s another Obamacare co-op going belly up. Unfortunately, it’s not the least bit surprising. The Kentucky Health Cooperative is going under after major losses.
The cooperative, created under Obamacare to offer insurance to enrollees, said that losses started to mount and couldn’t be overcome. A big problem is that the co-op had trouble paying out claims.
“Kentucky Health Cooperative has paid millions of dollars in claims on behalf of our members,” Jennings said.
The problem is that the cooperative was popular and many of the new members hadn’t received health insurance. That led to a pent-up demand for health services, which created millions in claims, the co-op said.
In 2014, the co-op’s losses were about $50 million but slowed to $4 million in the first half of 2015, the company said.
“We were on track to reverse direction and begin operating in the black, and we expected this to come about in 2016,” interim CEO Glenn Jennings said.
But last week the co-op and other insurers found they would receive less money from the federal government this year to help pay for the sickest customers.
The federal government doled out $362 million to insurers to help cover the costs of older, sicker Americans. The reason is the risk corridor payment program didn’t bring in as much money as expected.
The payments are determined through a mathematical formula that compares claims and premiums. Last year, payment requests by issuers exceed their charges, the Centers for Medicare and Medicaid Services said.
The insurers had requested nearly $3 billion.
Kentucky’s co-op received $9.7 million, when it asked for $77 million. (Read More)
The co-op will shut its doors after December 31 and more than 50,000 Kentuckians will need to find new insurance. It’s the fifth co-op this year to announce it is closing, and there are probably more to come. The whole scheme just doesn’t work.
About half of the state exchanges are facing financial difficulty of varying degrees while total Obamacare enrollment has dropped below 10 million. The entire system is being strangled by simple math: too much money is going out to pay claims and not enough in premiums is coming in. You have to wonder how many insurers would have jumped ship on the state exchanges if not for the risk corridor slush fund.
Read the whole thing. I wouldn’t be surprised if Democrats are secretly happy about this, hoping that it’s all going to come crashing down so they can usher in a single payer system.