A total of $1.23 billion in federal taxpayer dollars has now been sunk in 12 of 23 co-ops created under Obamacare that have gone out of business, representing another Obamacare failure, lawmakers say.
Co-ops in Arizona and Michigan went out of business last week, adding themselves to the 10 that have already failed in Utah, Kentucky, New York, Nevada, Louisiana, Oregon, Colorado, Tennessee, South Carolina, and a co-op that served both Iowa and Nebraska.
Experts and congressmen say the co-ops failed because of artificially low premiums, strict regulations, and too many people requiring payouts.
“This was set up for failure from day one,” said Rep. Chris Collins (R., N.Y) at a House Energy and Commerce committee hearing evaluating the failed-co-ops on Thursday. “Insurance companies knew it was going to fail, they released a product that was underpriced, they could not make money.”
“We’re here because Obamacare was set up for failure, it was set up to encourage low premiums, to deceive the American public,” Collins said. “Everyone knew these products were underpriced and they were going to make it up on the backs of taxpayers and that’s why we’re here today.”
According to experts at the Galen Institute and the American Enterprise Institute, the co-ops were established because it was believed that community members could come together to create health insurance companies. These companies would not have to answer to shareholders or be profitable.
But because the co-ops had large start-up costs, few people on their boards with insurance experience and no previous data to help them set prices for premiums, “the idealism has quickly faded,” the experts say.
Whatever your stance on Obamacare, one thing is clear: we don't have the money to waste funds on one more failed government program. Fortunately, a Convention of States can force the reform this country needs. By proposing constitutional amendments that impose fiscal restraints on Congress, We the People can decide what our country can spend money on and what it can't.