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Fox WSJ Pundits Pooh-Pooh Claim That Obamacare Co-Ops Were Sabotaged By GOP

Facts still have a liberal bias.
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First, let's dispense with some myths about the health insurance co-ops created by the Affordable Care Act. I see a lot of media claiming they were the replacement for the public option. They were not.

In fact, the funding Bernie Sanders secured for community health centers was much more of a replacement for a public option, along with the Medicaid expansion. Health insurance co-ops were part of the innovation strategy in the Affordable Care Act. Basically, what Democrats did back in 2010 was to take every idea for keeping health costs competitive and lower and add it to the ACA as a way to invite innovation.

Innovators know this: Sometimes you win, but more often you lose. It is true that many of the health co-ops created in the states are failing or in need of funds to keep going, just like many startups.

Wendell Potter spoke to Amy Goodman about this last week on Democracy Now! and explained why the co-op idea was always idealistic and likely doomed to fail.

And I wrote at the time that it would be great if that could—if we had a world in which those co-ops could succeed, but it was just sheer folly to think—and fantasy, to think that that could actually happen. And it’s because of largely what Steffie said: They would have to compete with these very, very large for-profit insurance companies, like the ones that I used to work for. I know what the barriers to entry—and in any market in this country, what those barriers are. They’re very, very high. And unless you have incredible capitalization, they’re just not going to succeed. I told—I testified before a Senate panel—a congressional panel, just a few weeks after that, that if Congress passed legislation without a public option, that they might as well call what they ultimately passed the Health Insurance Profit Protection and Enhancement Act.

And, Amy, that’s exactly what has happened. Since the Affordable Care Act went into effect, the for-profit insurance companies have thrived. Their stock prices more than tripled, and in some cases quadrupled, while the co-ops have been starved of funding, have not been able to overcome those barriers. And as we know, many of them are closing and leaving a lot of people in the lurch.


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Part of the reason these co-ops are closing is because they were overly optimistic about the health of their members. But the other reason they're closing is simply because they have no backstop to capitalize themselves in a way that keeps them affordable and reasonable for insureds, and that's because a locally-based co-op simply cannot absorb the costs of health care on the contributions of its members alone.

Were co-ops sabotaged by Republicans? Yes, directly and indirectly. They were sabotaged because Republicans are in charge of every major health insurance company in this country, and those companies don't want any small, disruptive co-ops in their way. They were sabotaged by Republicans on the national level as well, because they have no safety net from the federal government to keep them from sliding into the red. That's the indirect sabotage.

The real death knell, however, came when this happened:

The program has been under siege from the start, including from the insurance industry. Before the law’s passage, government grants to help them get going were switched to loans. None of that money could go for advertising — a wounding rule for new insurers that needed to attract customers. Moreover, the amount available was cut from $10 billion to $6 billion and then later, as part of the administration’s budget deals with congressional Republicans, to $2.4 billion. Federal health officials abandoned plans for a co-op in every state.

At the time, some health policy experts warned that the constraints would make it difficult for some co-ops to thrive. Most of the plans predicted that they would not break even for their first few years.

Honestly, these co-ops were never the answer. We do need a public option, or at the very least, an option to buy in to Medicare before age 65. But without a Congress to do that, it's likely the co-ops will simply become victims of appropriations deals and die a premature death.

Bernie Sanders is right when he says we need a political revolution, but it has to come in the form of state races and Congressional races. Not just the Presidency. A President Sanders would have no more chance of opening Medicare for all with this Congress than President Obama or even President Roosevelt did.

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