One of Nevada’s five insurance carriers authorized to offer health insurance policies under ObamaCare is going out of business, forcing thousands to find new insurance policies when open enrollment begins again this November.
The reason for the closure of The Nevada Health Co-Op is, like so many other problems we’ve seen with ObamaCare, due to rising costs and inadequate revenues.
That the costs of administering a complicated government bureaucracy would end up higher than anticipated is hardly a surprise. However, the financial disaster facing The Nevada Health Co-Op stemmed from not just spiraling claims costs, but an insufficient number of people – specifically, healthy young people – buying the coverage.
ObamaCare’s insurance mandate was supposed to ensure that enough healthy people enrolled for insurance so be adequate funds to cover the claims of those with more expensive medical problems.
Instead, in state after state, enrollment for ObamaCare policies has lagged below expectations. The only real exception to this is the states that allowed Medicaid coverage to expand to able-bodied, working age adults. This Medicaid expansion, which by its nature, is a subsidized government program and would not involve enrollees paying to help cover the cost of insurance coverage, has seen its enrollment figures explode beyond all estimates, burning through millions of dollars of federal funds and endangering state budgets.
According to The Las Vegas Sun, 14,000 Nevadans obtained insurance through the Co-Op in 2014. Exact figures were not released, but the Co-Op did say that there had been “significant growth” in 2015. “Significant” growth or not, it was still not enough to continue operations.
The Co-Op reported a $19.3 million operating loss in 2014, and a loss of $22.7 million in just the first half of 2015. Even $65.9 million in solvency loans from the federal government was not enough to keep them afloat, and no one can say for sure when – or if – those funds will be repaid.
Those who currently have insurance with the Co-Op will be able to keep their coverage until December 31, 2015, as long as they continue to pay their premiums. When open enrollment begins November 1, they will have to chose a new policy from one of the state’s four remaining carriers.
The Las Vegas Review-Journal noted that the Co-Op was the only locally-based carrier in Nevada that was providing insurance policies under ObamaCare. “[T]he co-op’s fate is a reminder that some components of the law don’t work as intended,” wrote the Review-Journal, citing the Co-Op’s failure as an important counterpoint to reports that the percentage of uninsured Americans had fallen from 17 percent to 12 percent.
The Co-Op had problems beyond just the purely financial. The Review-Journal described how there were widespread problems paying specialists, and many doctors who were supposed to be included in their network disputing having care contracts and refusing to see patients. Medical providers complained about the Co-op’s slow reimbursements – three months, when the industry standard is one month –and some quit the network.
The problem is not limited to Nevada. The Co-Op is the fourth co-op to fail nationally since Obamacare went into effect. One in Louisiana closed this past July with a net operating loss of more than $20 million, an Iowa co-op unable to survive with $145 million in federal loans shut down in January, and another in Vermont threw in the towel back in 2013 before it even began officially selling policies.
So far, the federal government has lent $2.4 billion to start ObamaCare co-ops across the country. Unfortunately, this appears to be yet another case of throwing more good money after bad: a review by the inspector general in 2014 found that 22 out of 23 co-ops lost money.