US health insurance co-ops are struggling

health insurance exchange

HHS audit finds that insurance co-ops are failing to generate profit

The Department of Health and Human Services (HHS) recently conducted an audit of 23 health insurance co-ops in the United States and found that the majority are struggling financially. These insurance co-ops were established by the Affordable Care Act to serve as non-profit alternatives to exchanges. The co-ops are operated by the federal government and provide consumers with a way to find relatively inexpensive insurance policies that may not be available through other markets.

All but one co-op has lost money last year

According to the HHS audit, out of the 23 co-ops that the federal government operates throughout the country, 22 have lost money in 2014. Only Maine’s health insurance co-op managed to generate a profit, with two co-ops, operating in Iowa and Nebraska, were shut down due to financial concerns. Some of the financial problems that the co-ops are facing may be due to lacking enrollment. Some 13 of the co-ops have fallen short of their enrollment goals, with some falling so short that they could face financial collapse.

Low enrollment could prohibit co-ops from repaying government loans

health insurance exchangeWhile the co-ops are non-profit, they still require financial support in order to provide services to consumers. The financial issues that the co-ops are facing could leave tax payers throughout the country responsible for some $2.4 billion in loans that were used to initially establish these health insurance markets. Low enrollment rates are prohibiting the co-ops from repaying these loans and could compromise their sustainability in the future.

Some co-ops will stop offering health insurance coverage next year

Despite the financial problems the co-ops are facing, the White House has asserted that they are competing effectively with established health insurance providers. This may be the case, but they are not generating profits in the same way as traditional insurers. Some co-ops, such as the Louisiana Health Cooperative, will no longer be providing coverage next year due to this problem, which calls into question whether or not the co-ops actually have the capability to compete in the current health insurance market.

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