Consumer Operated and Oriented Plans, or CO-OPs, continue to fail. (here) As I testified before the Congressional Joint Subcommittees of the House Oversight and Government Reform Committee, CO-OPs were doomed from their creation in the Affordable Care Act (ACA), or Obamacare. (here)

During the health care debate in 2009, proponents of more government control wanted a program that would compete with private insurance companies, hence the public option. Many supporters of the ACA believed this government option was a step too far and settled on CO-OPs as a compromise idea.

Although start-up costs for CO-OPs are provided by taxpayers, the ACA restricts their marketing, limits their premium pricing, forces them to comply with all respective state health insurance regulations and requires them to be extremely efficient with a 95 percent medical loss ratio. Basically, CO-OPs are new health insurance companies without any established financial reserves and with premium pricing designed to attract sicker and, consequently, more costly patients.

The ACA initially allocated $6 billion for CO-OPs. Ultimately $2.2 billion was directed to CO-OPs.

As of last week, nine of the original 23 CO-OPs have collapsed and closed their doors. These nine received nearly $1 billion in federal loans. The Obama Administration has not authorized more funding and Congress has likewise not provided more financial support. It is assumed the $1 billion in taxpayer money is not recoverable. Approximatley 500,000 enrollees in these nine CO-OPs have been forced to find new health insurnance plans.

Although all the remaining CO-OPs now treat their solvency loans as "capital", economists report that none of them has sustainable insurance premium pricing. (here) In other words, all of the remaining plans are at high risk of failure.

CO-OPs represent one more example of a poorly-conceived and executed government program that costs taxpayers billions of dollars.