Stanley Feld M.D.,FACP,MACE
I apologize for spending so much time on the failure of the Obamacare Co-Ops. It is worth emphasizing because this is an example the common denominator of the many other Obamacare failures.
A reader asked me to list the 12 states that closed down and declared bankruptcy before 2016 enrollment leaving 700,000 consumers without insurance coverage.
In my last blog on Co-Ops I did not mentioned the name of the 12 states Co-Ops that went bankrupt. These state Co-Ops defaulted on their federal loans. The federal taxpayers loss was $1.2 billion dollars.
I did not list them because I predicted that all 22 state Co-Ops would go bankrupt by the end of 2016. Taxpayer’s will lose at least $2.5 billion dollars in loans for a program destined to fail from the start.
CMS has said it will regain most of the money and but has not explained how it will recover the loan losses. There were multiple reasons for the Co-Op failures.
An important reason is the disastrous business plans. The Obama administration hired Deloitte to evaluate each state’s loan application. Deloitte’s advice concerning the applications deficiencies was ignored by CMS and the HHS.
The point is the Co-Ops are ill conceived, as many of the Obamacare “innovations” are ill conceived. Once the ideology is approved the Obama administration ignores the advice from expensive hired consultants.
Deloitte Consulting evaluated the viability of the state Co-Ops by evaluating their loan applications and business plans. Deloitte expressed concerns about the now defunct 13 Co-Ops. According to the study from Republicans on the Senate Permanent Subcommittee on Investigations, the Department of Health and Human Service and CMS ignored Deloitte’s warnings.
- "HHS instructed Deloitte to evaluate the proposed budgets for completeness as well as “reasonableness and cost effectiveness.” The Department told Deloitte to review the pro forma financial statements for completeness, clarity of assumptions, and consistency with each Co-OP’s business plan.
In its review, Deloitte identified numerous problems ranging from comparatively minor issues, such as omitting needed expenses, to more significant concerns, like presenting an unreasonable budget.”
2. In addition to inconsistencies, Deloitte noted that many of the Co-Ops’ budgets appeared to be unreasonable or did not align with the states own financial projections.”
This is typical of many bureaucracies in government agencies.
- Deloitte also expressed skepticism about the risk-taking and unreasonable assumptions reflected in some of the Co-Ops’ financial projections.
3. "Each CO-OP loan applicant was required to “identify its management team, explain their qualifications and experience, and submit an organizational chart and detailed position descriptions, including the qualifications required for each position.
4.Based on its review of this portion of the CO-OP’s business plans, Deloitte consultants expressed concern over key leadership position gaps or thin
Industry expertise for all of the 12 failed Co-Ops.”
This observation, by Deloitte alone, should have disqualified the state Co-op from obtaining a federal loan.
The devil is always in the details. The details are so voluminous than few dig in to find the defects. The goal is only to have the paperwork done.
Deloitte had many negative comments. The loans were made despite the negative comments by the Obama administration.
Some state CO-Ops did not even list the senior management team.
- “These failed co-ops were a costly experiment gone wrong, and real people got hurt, including the more than 700,000 Americans who lost their health plans,” Sen. Rob Portman, chairman of the subcommittee, said today at a hearing on the co-ops.”
How many more Obamacare programs are constructed to fail?
Can taxpayers trust the government to control its medical care with a single party payer system when a single portion of Obamacare is so poorly constructed and consultants ignored?
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
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