Failures of non-profit health insurance could cost $1.2 billion

by Paul Lucas18 Mar 2016
A new report has slammed the performance of non-profit health insurance schemes that were created as part of the Affordable Care Act in the USA: suggesting they could cost the government as much as $1.2 billion.

Released by an investigations panel, the release suggests that officials did not take notice of warnings about the potential fragility of the plans and ultimately moved too late when problems began. It now believes that most of the loans are unlikely to be recovered and that some will not be able to pay the significant sums of money still owed to hospitals and doctors for the care provided.

“These failed CO-OPs were a costly experiment gone wrong, and real people got hurt — including the more than 700,000 Americans who lost their health plans,” commented Senator Rob Portman as the hearing opened.

The idea behind the Consumer Oriented and Operated Plan was that it would offer new coverage as an alternative to traditional health insurance. However, it is suggested by some commentators that it never had a realistic chance of competing as its funding was slashed almost instantly. This was followed by a decision from federal health officials to pay out just 12.5 per cent of what was owed to the plans, as well as other insurers, within a different section of the law which was designed to form a balance in the cover offered to sick and healthy patients.

Now the report suggests that the Department of Health and Human Services was aware that financial predictions were not adequate or were incomplete – but that officials decided to approve the loans regardless. Overall, it is estimated that for every $1 sent to the failed plans, $1.65 was lost.

However, in response, the director of Centers for Medicare and Medicaid Services commented that the challenges were the equivalent of “small business start-up problems” and should not be seen as indicative of the actual program itself.