If Leftists Ran Insurance Companies…

Published February 18, 2015

I’ve occasionally had the thought that it would be entertaining and informative to produce a ‘reality’ television show featuring young leftists of the Occupy Wall Street variety trying to run a retail store of some sort, perhaps an Orange Julius stand at a mall or a Blimpie sub shop somewhere. Usually this thought occurs to me when I hear someone explaining how small business owners should easily be able to afford to pay all their workers a ‘living wage’ as well as provide health benefits, paid sick leave, and everything else on the wish list of the left. Needless to say, nobody who has ever told me how easy it would be has ever actually tried to do it.

Obamacare actually did provide a version of this, although the cameras weren’t rolling and the taxpayers wound up footing the production costs. Called Consumer Oriented and Operated Plans, or CO-OPs for short, the idea was basically to hand out billions of dollars in taxpayer funds to startup non-profit health insurance companies, who would provide competition and show the world how to provide health care without being one of those mean old health insurance companies everybody loves to hate. 

In 23 states, $2.5 billion was given out as seed capital to get things rolling. It’s probably not fair to lump the people who started the CO-OPs in with the Occupy crowd, but suffice it to say the general mindset of the people starting CO-OPs seemed to be of the ‘We’ll show them how easy this is’ variety.

The results have been about what I’d have expected of my fictional show Occupy Orange Julius, namely failure. The most ‘successful’ of the CO-OPs in terms of enrollment, Co-Opportunity Health in Iowa and Nebraska, didn’t even make it to the end of its first year, as the New York Times reports:

CoOportunity Health, was one of 23 nonprofit cooperatives created under the Affordable Care Act to generate more competition and choice in insurance markets dominated by huge for-profit companies. Many of these newcomers to the industry, seeded with hundreds of millions of dollars in federal loans, struggled to attract customers after the law’s online insurance exchanges opened in 2013. But CoOportunity had seemed to flourish, with over 120,000 customers in Iowa and Nebraska — far more than the 15,000 it had anticipated — by the end of last year.

Its success apparently helped doom it. CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low…

Of course, if you dramatically underprice your product, you too can enjoy great success in business – until you can’t pay your staff and suppliers. The Occupy Orange Julius franchisee will also be a smashing ‘success’ charging $0.49 per drink, right up until it goes bankrupt.

Apparently Co-Opportunity Health is just the first of the CO-OPs to go down. AM Best, an insurance rating company, found that only one of 23 CO-OPs was in the black in 2014. Two CO-OPs, in Massachussets and New York, apparently are paying out over a $1,000 in monthly claims per patient for every $200 in premiums they bring in. There’s really only one outcome available with these sorts of numbers.

Occupy Orange Julius is a mildly amusing concept. Occupy Health Insurance with Taxpayer Dollars is not. Sadly, the authors of Obamacare just blew $2.5 billion in taxpayer dollars to produce the rough equivalent of All My Babies’ Mamas.