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How the Health Co-Ops Can Meet Their Financial Obligations

flying cadeuciiA congressional subcommittee held a hearing Thursday to examine the health insurance co-op loan program established by the Affordable Care Act.  The program provided $2.4 billion in taxpayer-backed loans as seed money for the co-ops, which are private companies that were originally intended to bring competition, choice, and innovation to the health insurance market. In spite of this seed money, co-ops are off to a rough start.  Since their inception just over two years ago, 12 of the original 23 co-ops have closed due to financial concerns.  Taxpayers aren’t the only ones at risk of getting left with the tab for the co-ops.

A co-op left doctors and hospitals in Iowa and Nebraska holding over $80 million in unpaid claims when it closed.  Worse still, consider that unpaid claims left behind by failed insurance companies are often allocated by state guaranty funds to the surviving insurance companies, who ultimately pass them on to consumers.  One way or another, you’re likely to pay for any obligations the co-ops can’t meet.  The co-ops’ leaders don’t offer much comfort, either.  One co-op CEO recently offered this assessment of the co-ops’ prospects for re-paying their loans: “Will there be a little money left?  Yeah, maybe.”  Fortunately, the surviving co-ops have an often-overlooked asset they can tap to stay in business and meet their obligations: the recovery rights to their overpayments.

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The Strange Case of the C. Everett Koop National Health Award

The late Dr. C. Everett Koop was the most revered Surgeon General in history, perhaps even the most revered Cabinet member.  His calling card—indeed, his claim to fame – was his integrity.  A Reagan appointee, he acted as though he reported to no one other than the American people and his own conscience.  His penchant for candor and scientific independence fueled the federal government’s groundbreaking steps to raise public awareness about HIV/AIDS at a time when the tendency was to demonize and diminish.  He resisted incessant political pressure and refused to take positions or produce data that he knew to be false.

This drew strong support from both sides of the aisle, and even his detractors never questioned his honesty.  (Exhibit A:  The two authors of this posting, whose political views have little else in common other than respect for strong, independent-minded politicians.)

Dr. Koop’s legacy stands in sharp contrast to the eponymous award dispensed by The Health Project, whose committee members have turned their back on their founder. The last thing Dr. Koop would have expected is to see is *his* award bestowed upon  people who know that they don’t deserve it.  The 2012 award was given to three recipients for work done in Nebraska:  a vendor that claims wellness programs don’t even have to exist to save money, an outfit that can’t even spell the name of its own founder, and a state employee benefits plan that is under investigation for sky-high administrative costs.

Among the extravagant statements that formed the basis for the award (like claiming more than $20,000 in savings for every person who reduced their risk factors for a year, even though per-person spending is only $6,000), they claimed to have made 514 “life-saving catches” on employees with otherwise undetected cancer.  This data was obviously wrong to begin with — that cancer rate would have been at least 40 times greater than Love Canal’s.  Nonetheless, it sure sounded good, and the Governor of Nebraska himself was all-in too, so an award was issued.

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