02 Sep 2015 Three ObamaCare Co-Ops Down, 20 To Go
Under ObamaCare, health Co-Ops—non-profits that provide insurance—are allowed to receive federal grant money to start up operations in the ObamaCare exchanges. There are 23 such Co-Ops.
Or, rather, there were. In January, the state insurance regulator of Iowa decided to liquidate CoOportunity Health, which served Iowa and Nebraska. Basically, the money CoOportunity collected in premiums couldn’t cover its medical claims. The cost to taxpayers: $146 million.
Last week, Nevada Health Co-Op announced it would be discontinuing business at the end of this year. “’It is with deep sadness that based on challenging market conditions, the Board made a painful decision to wind down operations of the Nevada co-op at the end of the year,’ co-op member and Board Director Stacey Hatfield said in a statement.”
And it is with even deeper sadness that I announce this cost taxpayers $65 million in federal solvency loans.
I wonder, was it really “challenging marketing decisions” that were the problem, or was this just a bad idea from the word go? As Ed Haislmaier of the conservative Heritage Foundation put it, “It was a badly done attempt to reinvent the wheel with some genius deciding to make it oval instead of round.”
Louisiana Health Cooperative’s then-Chief Executive Officer Terry Shilling signed a $4 million, four-year contract with a consulting firm last year in which he is a principal, according to documents obtained by the Washington Examiner….
The Examiner also found that Louisiana Health Cooperative’s leadership ranks include seven of Shilling’s business associates, and the new co-op agreed to pay an additional $3.3 million annual fee to the consulting firm, which is registered in Georgia as Beam Partners.
Besides Shilling, individuals from Beam fill three of Louisiana Health Cooperative’s director positions, two vice president slots and the chief financial officer. Eight of the top 11 co-op managers are from Beam.
On top of the $4 million contract and $3.3 million annual consulting fee, Louisiana Health Cooperative also agree to an additional 20 percent “performance fee” to be paid to Shilling’s firm….
Louisiana Insurance Commissioner Jim Donelon told the Examiner his department would take a look at any conflicts of interest concerning the contract, saying, “that is a matter under review.”
Well, let’s hope that if he finds criminal wrong-doing, he can get back some of those consulting fees. It would offset the $66 million in taxpayer loans Louisiana Health Cooperative received.
And the future for most of the remaining 20 Co-Ops? Not too rosy, according to reports for A.M. Best, Standard and Poor’s, and the Office of the Inspector General for the Department of Health and Human Services.