Government Bailouts Business Strategy for Obamacare Health Insurance Co-ops | Health Policy Blog | NCPA.org

Taken together, these facts suggest CoOportunity executives purposely set rates low to gain market share — assuming taxpayers would bail-out their losses. The strategic plan was simple: 1) underprice premiums to gain market share; 2) Let taxpayers bailout the losses with emergency solvency loans and the risk-adjustment distributions; 3) increase premiums later once the dust settles.  This seems to be a common theme among health insurance co-ops. This type of activity should not have been allowed.  Most stakeholders — apparently including CoOportunity Health — expected taxpayers to bailout struggling co-ops indefinitely.  It’s now clear that is no longer going to happen.

The spectacular failure of CoOportunity Health was a wakeup call to other health insurance cooperatives, state insurance regulators, HHS and taxpayers. But it won’t be the last co-op that goes broke owing taxpayers large sums of money.  Going forward, state insurance regulators and other government regulatory bodies need to be on the lookout for co-ops that have strategic plans premised on losing taxpayers money while gaining market share — expecting taxpayers to bail out the insurer.  I suspect it will happen again and again until most of the co-op health insurers lose all their taxpayer financing and go bankrupt.

via Government Bailouts Business Strategy for Obamacare Health Insurance Co-ops | Health Policy Blog | NCPA.org.

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