The Great Health-Care Heist

In the end, only 23 co-ops received funding. "They don't want to do anything to make the situation in the states better," says Yarmuth. "Instead, they're actively undermining the programs."


Nobody gave the co-ops much of a chance. They had to put together plans overnight, win competitive pricing from providers and get word of their existence out without spending any of the government loan money.

Still, many were run by real pros with decades of experience. Take Dr. Martin Hickey, CEO of the New Mexico Health Connections co-op and a former executive with Cigna and Blue Cross. "This wasn't just a do-gooder thing," he says. "This was people who understood business, understood insurance and what it was going to take to make this really work. Hope is not a strategy."

Senate Minority Leader Mitch McConnell's home state of Kentucky has one of the most successful state co-ops, Kynect, which grabbed 60 percent of the market. McConnell, ironically, helped sabotage co-op funding in 26 other states.
Gage Skidmore/Creative Commons
Senate Minority Leader Mitch McConnell's home state of Kentucky has one of the most successful state co-ops, Kynect, which grabbed 60 percent of the market. McConnell, ironically, helped sabotage co-op funding in 26 other states.
Occupy Wall Street protestors at Pfizer's world headquarters in New York. The pharmaceutical giant benefits from the government's inability to negotiate a better price for their drugs. Canadians pay about a third less for Pfizer's Celebrex than their American counterparts.
Michael Fleshman/Creative Commons
Occupy Wall Street protestors at Pfizer's world headquarters in New York. The pharmaceutical giant benefits from the government's inability to negotiate a better price for their drugs. Canadians pay about a third less for Pfizer's Celebrex than their American counterparts.

Soon, co-ops were offering the lowest premiums in a third of the states in which they operated. And even when they weren't the lowest, they were providing enough competition to drive down all premiums by 8 percent.

In New Mexico's case, Hickey found that hospital groups had a motive to expand competition.

"We were able to sit down with large groups and say, 'This market is consolidating, and the last thing you want is one or two major players, because they'll hammer the hell out of you,'" he says. "I used to work at one. I know. 'It's in your interest to give us a good rate to give us a foothold in the market. We're physician-oriented and physician-led. We get it.'"

The most thriving co-op is Maine Community Health, which has taken 80 percent of the new market from Anthem Blue Cross Blue Shield (a WellPoint subsidiary), despite comparable prices. Co-ops in Nebraska and Iowa secured more than half the market, while Kentucky's co-op grabbed 60 percent.

The latter proved a bitter irony for McConnell, who was instrumental in eliminating funding for 26 other states. Next year, the Kentucky co-op will expand into West Virginia, one of three moving into neighboring states.

"We don't need to own the whole market," says Julia Hutchins, CEO of Colorado Health Insurance Cooperative. "There's an opportunity to push the entire industry in a direction more focused on consumers, and we can do that even with a very small market share."

Of course, not every co-op has been successful. Minuteman Health in Massachusetts, Evergreen Health Co-op in Maryland and Oregon's Health CO-OP were hamstrung by faulty websites. Others wound up on the wrong side of price, such as Arizona's Meritus Health Partners, which was dramatically undercut by private insurers.

Some, such as the Louisiana Health Cooperative, have already run into trouble. Former CEO Terry Shilling tried to turn it into a money grab for his former health consulting firm, Beam Partners, proposing a four-year contract whereby Beam would receive a $3.3 million consulting fee, a 20 percent performance fee, and up to 50 cents for every person who signed up for the plan.

Moreover, there remains the question of what happens when some of the co-ops inevitably fail. Republicans, who have attempted to subvert Obamacare at every turn, are sure to turn such failures into Benghazi-sized incidents on FOX News. Those on the frontlines don't possess much faith that Obama will have their backs.

"How do you spin that?" asks Hickey. "It is spin, and I'm not trying to be critical, but up until now, the administration hasn't done a great job of spin on any issue with the Affordable Care Act. So that worries me."


There's little doubt that Obamacare achieved some remarkable things. Given that Congress can barely agree on whether to pay its bills, the simple act of helping 8 million people get insurance is extraordinary in itself.

And there is reason for optimism.

Brookings Institution scholar Thomas Mann is an expert in political dysfunction. He co-authored It's Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of Extremism. Considering the "Republican party's swing to the right and decision to oppose anything," he believes it's important to take a long view of Obamacare.

"He succeeded where presidents for a half-century have failed, so it wasn't going to be pretty," Mann says. "And it wasn't going to be easy."

Every expansion of the social safety net has been contentious. None kicked off without difficulties. The question is whether Democrats will be willing to wade back into the fight to address Obamacare's woes — particularly the lack of cost controls and competition — while taking endless fire from Republicans, who've shown no interest in repairing health care at all.

As Mann sees it, Obamacare is but the first battle.

"Sometimes it takes something that looks godawful to set things in motion for some steps that will eventually give us a better system," he says. "To the right it looks like communism, but to more rational observers, these are constrained, incremental changes. But they could add up to something quite non-incremental."

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