ovember 1, 2015
SHARYL ATTKISSON: Last week, we looked at the many challenges facing ObamaCare. The ObamaCare co-ops are nonprofit insurers that were intended to help provide competition and they received $2.5 billion in low-interest loans at taxpayer expense. But they are falling like dominoes. This week, Utah joined the list, list making 10 failures out of 23 and some predict the majority of the co-ops could flat line by the end of the year. Scott Thuman went to one state where their co-op is going under.
SCOTT THUMAN: Yeah, big problems Sharyl. We went to Nevada to talk to people who joined the co-ops because of their own already rising health care costs. And now find themselves in a worse place than where they started.
STEPHEN MANGION: The doctor said, I said, am I going to be in pain. And he said yes, you’re going to be in a lot of pain, you might not be able to work and there's nothing I can do for you. You can pay cash out of pocket but it's $800.
THUMAN: So it was either be in pain or owe a lot of money you don’t have?
THUMAN: That was 30-year old Stephen Mangion’s medical nightmare. The meat grinder at Larry’s Great Western Meats in Nevada was battling back pain and engaged in a second battle with his provider. Is that scary?
MANGION: Yes. To wake up to find out that you’re not going to get your medicine the next day that you need and you’re depending on to get you through the next day. Yes.
THUMAN: He’s talking about the Nevada Health Co-Op where he gets insurance, though not for long. Nevada is now one of 23 co-ops created by the Affordable Care Act known to most as ObamaCare. It is also one that is failing and will shut down at the end of the year. It’s a number that is growing.
ROBERT LASZEWSKI: And so here we are, just two years into ObamaCare and they are dropping like flies and no one is surprised.
THUMAN: Robert Laszewski is a health industry analyst.
LASZEWSKI: The federal government is going to spend more than $2 billion on this really stupid idea that turns out never worked. It was awfully naive to think that you could put people in business in the most problematic part of the market and they were going to take on the insurance giants and show them how it was done. I mean, this is just a government fiasco.
THUMAN: He says the co-ops faced a stacked deck from the beginning.
LASZEWSKI: The insurance companies generally don’t make money in the individual market. They make it elsewhere. They make it in Medicare, they make it in employer-based care. So the co-ops could only be in the problematic part of the market no one has ever made money in. And then the co-ops could only take financing from the federal government. They didn’t have the ability, they don't have the ability to go raise more capital outside of the government.
THUMAN: Eli Corey is the owner of Great Western Meats. Earlier this year, he signed up with the Nevada program for himself and his workers, including Mangion. The problems were evident almost immediately.
ELI COREY: Every month, our insurance used to cancel. The first few months I saw, are we paying the bills on time? Come here, check the system, no, the bills are being paid, checks are being cleared. Called them up and said, oh we have an error in the system. We have to reinstate everybody end of the month and now we’re having problems with doctors now.
THUMAN: So doctors didn’t want to see you because you were using the co-op?
COREY: Yeah, they would prefer something else because like they feel bad for you and they give you the look like, oh, is there a problem?
THUMAN: In fact, so many problems from the taxpayer-funded program that in August the director announced based on challenging market conditions, the board made a painful decision to wind down operations at the end of this year.
COREY: I feel bad because it is local. It’s co-op, it’s nonprofit. I feel bad to see a nonprofit company closing when other companies are cashing out billions and trillions of dollars. I think they probably have to work it out better. You can't offer something for free. Even if it’s a non-profit you have to cover your minimums and I think they did it wrong from day one. When you set up something and you start losing money, it's wrong.
THUMAN: Now Corey, his employees, and about a half-million other co-op customers across the country are scrambling to find new health care by the end of the year.
COREY: When I heard they news that they were closing I said okay, it’s not a big surprise because the way they are operating, I don't think a lot of people are going to take that.
THUMAN: The government is now closely motoring the remaining co-ops, even putting them on informal watch lists and warning them to take corrective action but many feel they may be too far gone to resuscitate.
ATTKISSON: What are they monitoring them for at this point? What can they do?
THUMAN: Well, they are really just trying to tighten the reins a little bit on an industry that for the most part seems to be self-governing but failed to do so well.
ATTKISSON: One additional note from our friends at the Daily Caller. They say 18 out of the 23 co-ops paid their top executives huge salaries ranging from $263,000 to $587,000. This as some of them were going under.
THUMAN: Yeah and not just a problem but possibly Sharyl a violation of federal law and the ObamaCare rules which prohibit excessive executive compensation. So a lot more to look into there.