A New Attack on Health Care Reform

In recent months, several nonprofit insurance plans that were created to compete with for-profit insurance plans under the Affordable Care Act have run into financial difficulties. Republicans and other critics of health care reform are cynically pointing to their problems as evidence that the whole reform effort is a waste of money that ought to be repealed.

They neglect to mention that the nonprofit plans, known as health insurance cooperatives, were created as a weak, underfunded alternative to a much stronger option that the Republicans blocked from passage.

Back in 2009, while the reform law was being debated in Congress, most Democrats were pushing for a so-called public option, a government-run plan that consumers could choose as an alternative to private insurance. Such a plan would not have to generate profits and would have stronger bargaining powers to obtain discounts from health care providers, enabling it to charge lower premiums than private plans.

When it became clear that no public plan could survive a Republican filibuster, Senator Kent Conrad, a North Dakota Democrat, proposed setting up these cooperatives to compete with the profit-making plans. They, too, were presumed able to charge lower premiums because they would not have to earn profits. The co-op provision was included in the reform law enacted in March 2010.

Co-ops have been created in 23 states, enrolling more than a million people as of March 25. However, eight of these co-ops — in Colorado, Iowa, Kentucky, Louisiana, New York, Nevada, Tennessee and Oregon — have announced this year that they are closing, and many of the remaining co-ops are losing money, too.

Their problems have been attributed to wrong estimates for how many people might enroll and to setting premiums too low to cover the cost of care, as well as severe reductions in the amount of money available to the co-ops from federal loans and for risk adjustment payments, both the result of Republican opposition to supporting the plans.

The overriding problem was the difficulty in setting up the co-ops from scratch to compete against entrenched insurance companies with deep pockets. Still, with capable management and adequate funding, nonprofit cooperative plans can succeed for patients and providers. Group Health Cooperative, based in Seattle, has been in business for 70 years. It provides coverage and care for around 600,000 people in Washington and Idaho.

The co-op closures will mean that hundreds of thousands of people covered by those plans will have to sign up with other plans, probably with higher premiums.

Republicans and other critics have been trying for four years to destroy health care reform. Three years ago the Supreme Court rejected their efforts to declare the health care reform law unconstitutional and this past June it rejected their attempt to invalidate subsidies to help buy insurance on the federal exchange used by most states.

Now they are after smaller game, the co-ops. The Obama administration should see if there are ways to buttress the remaining co-ops financially. Even if some of the co-ops close, their enrollees will be able to find other sound health coverage thanks to the reform law Republicans were unable to repeal.

Editorial

A New Attack on Health Care Reform