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Finding out what’s in it: Obamacare co-ops in Tennessee and Kentucky have announced that they are going out of business and their customers need to find new health insurance plans.
The following two paragraphs about the failure of the Kentucky co-op illustrate succinctly what conservatives were saying about Obamacare before it was launched about why it was never going to work:
The co-op lost $50 million last year, partly because over 20,000 more people had purchased the insurance than originally estimated. Glenn Jennings, Kentucky Health Cooperative’s interim CEO, told the Herald-Leader that further financial woes came because many of their new members had not previously had health insurance, leading to “a lot of people with pent up medical needs.” Then, said Jennings, “when they suddenly had health insurance…they began using their benefits.”
Jennings said that they had slowed their losses to $4 million in the first half of 2015, but were counting on substantial federal loans to continue operations. Instead, the feds announced they would only provide 12.6 percent of the funds requested by insurers through the assistance program. Kentucky’s insurers were hoping to get a total of $77 million in loans, but only received $9.7 million.
If insurance companies are forced to take anyone, as Obamacare does, then no one is going to buy insurance until they need it, defeating the entire premise of insurance. Thus, the Kentucky co-op was quickly saddled with too many sick customers and not enough healthy ones to pay the costs. To solve this they were then depending on the government to make up the difference. This however is simply impossible. There just isn’t enough of other people’s tax dollars to fund such inefficiencies.
The unsurprising result: Bankruptcy. As the article notes, of the 23 state co-ops still in operation, 21 are losing money. Expect more bankruptcies to come.