ACA Co-Ops Dropping Like Flies

Michigan’s Consumers Mutual Insurance put a notice up yesterday that it will not offer insurance in 2016, making it the 12th ACA co-op to fall—a number that’s more than half of the 23 co-ops set up by the ACA in 2014. More, via WaPo:

The dozen collapses will disrupt insurance for 740,000 individuals and small-business employees, who are being instructed by state and federal officials to choose new plans in time for them to take effect in January. In New York state, the window is narrower. Government officials have moved up the closing date of the New York Health Republic co-op, the nation’s largest, giving its more than 200,000 members just two weeks to select different coverage before it shuts down at the end of this month.

Democrats, of course, have blamed Republicans for cutting federal funding to co-ops, which they argue could have kept them afloat. But the structural causes of the closures appear to lie deeper. Every co-op’s financial situation is unique, but in the case of one early closure—Iowa’s Cooportunity Health—premiums were set too low to cover the cost of the sick patients it attracted. Another threatened co-op, meanwhile, looked at the possibility of raising premiums. In other words, there is a tradeoff between plan affordability and insurer sustainability that the ACA simply hasn’t solved. Insurers can make their coverage affordable, but then their viability is threatened. Or they can raise premiums and save themselves—but at the cost of increasing the financial burden placed on Americans, whether directly or through tax dollars.

And that, in short, is the entire story of the ACA. Increasing federal funding for health care—whether funds for co-ops or subsidies on the individual market—may help paper over structural problems or forestall some specific problems, but it won’t fix the fundamental fact that we don’t have a sustainable system that can get health care to Americans cheaply and efficiently. As long as treating sick patients remains expensive, expect to see more crack-ups like the great ACA co-op collapse.