Failed Obamacare Co-Ops Add to the Cost of the “Affordable Care Act”

At the risk of sounding like a broken record, there’s more to be upset about in regard to Obamacare.

After the Affordable Care Act was passed and the government started  setting up, there were some areas where there weren’t many insurers, so Congress set up healthcare co-ops to insert some competition into those areas to make sure there were affordable options.  So we see that from the beginning, the idea of a government healthcare plan was bad for the economy.  It was so bad that in some states, insurers would rather get out of the health insurance business than participate in the federal government’s healthcare experiment.  But, thankfully, Congress stepped in and came to the rescue with those co-ops!  Phew.  They really saved the day!

Or not . . .

Because now, with less than two full years under the government’s belt, nearly half of the 23 co-ops are folding, and we are finding out there’s some corruption at the top to boot.  Isn’t government intrigue fun?

Here’s a report from the Daily Signal:

Before 11 of the 23 nonprofit insurers created under Obamacare announced they would be closing their doors, the top executives running their operations raked in large sums of money.

According to 2013 tax filings accessed through, the top executives at the 11 co-ops that have announced they will be winding down operations made an average of $245,203 annually. Tax filings for 2014 are not yet publicly available.

The Affordable Care Act placed a $500,000 salary cap on co-op employees, and executives running the nonprofit insurers earned a high of $490,125—paid to Jerry Burgess, chief executive of Consumers’ Choice Health Insurance Cooperative in South Carolina—and a low of $46,524—paid to Joanne Hill of Colorado HealthOP in Colorado.

In 2014, the median income for households was $53,657.

Aaron Albright, spokesman for the Centers for Medicare and Medicaid Services, told The Daily Signal the co-op loans cannot be used to provide “excessive compensation.” Additionally, Albright said the Obama administration reviews top co-op officials’ employment agreements to ensure the nonprofit insurers are complying with the terms of their loans.

Here are just a few thoughts that hit me as I read about this debaucle:

  1.  How in the world can there be a $445,000 difference in income of 2 people who are doing the same job? (Burgess in South Carolina and Albright in Colorado).
  2. How can organizations that are so top-heavy in salary outlay be expected to be cost effective in their operations?
  3. How can non-profits justify paying anyone excessive salaries?

The excessive salaries have obviously contributed to the fall of the co-ops, and it is always maddening when people who haven’t earned it are overpaid.  But the real problem with this is that now all the citizens who were insured through these 11 failed insurance co-ops are once again without insurance.  They will have to wade through their options on the marketplace exchange.  They will have to worry and stress about how much their new option will cost, and they will likely face a substantial premium increase because the artificial insurance competition that was once present in their area is now gone.  In addition to these people who are directly affected by the failure of these co-ops, the rest of us are going to have to pay additional premiums and penalties to make up for the losses.

How long will it be until supporters of Obamacare will admit it is a failed experiment?  Until then, the taxpayers are left to bail out yet another failed government program.