The big news about UnitedHealthcare bailing on Obamacare may make people forget about the failed Obamacare cooperatives and, more importantly, why they failed. Despite the widespread belief that expert planning was involved in the Affordable Care Act, it is pretty obvious that these co-ops were thrown together as the embodiment of a bunch of Liberal/Progressive cliches. They were doomed to fail.
According to Reason.com:
A government program being poorly run is nothing new, of course. But the co-ops established under the health care law were subject to a series of regulations that make you wonder how they were ever supposed to succeed in the first place.
“It should be no surprise that so many of them are going belly-up,” said John Davidson, director of health policy for the Texas Public Policy Foundation, on the latest edition of the Watchdog Podcast. “The rules that they put on these co-ops almost set them up to fail.”
For starters, the co-ops were barred from hiring anyone who had served at an executive level at any health insurance company in the country.
Think about that for a second. This was essentially a brand new business venture that was prevented from relying on the expertise of anyone who might have the slightest idea what they were doing.
Another regulation prevented the co-ops from raising any capital aside from what was provided via those federal loans. Other rules prevented the co-ops from being allowed to turn a profit, and if one happened to accidentally make money anyway, it wasn’t allowed to use its profits to help it grow.
It’s the kind of business plan that would be laughed out of a business school classroom.
“The co-ops were essentially amateur exercises,” said Davidson. “Running a health insurance company and keeping it actuarially sound is a difficult thing to do, under the best of circumstances.”
You and I and anyone else who was not a member of Occupy Wall Street, if we had been permitted to see the design of these co-ops, would have known that they would fail. Yet all the experts behind Obamacare thought these co-ops were a brilliant government program.
The moral of the story is: socialist ideology makes people stupid.