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.
Forum for Healthcare Freedom 