Part of the Affordable Care Act initiative was to set up nonprofit health cooperatives that would provide health insurance to the uninsured at lower costs and provide more competition to already established health insurance organizations across the country. Despite this goal, The Wall Street Journal's Stephanie Armour reported that over half of the 23 state co-ops failed soon after receiving their federal loans.
Despite this colossal failure, Andy Slavitt, the acting administrator for Centers for Medicare and Medicaid Services, has defended the administration, saying it is not at fault, Richard Pollock wrote at The Daily Caller. All of these failed co-ops caused millions of those insured by these entities to immediately seek coverage elsewhere or face the substantial penalties associated with being uninsured.
"Over half of the 23 state co-ops failed soon after receiving their federal loans."
While these co-ops took on the monumental burden to provide coverage to millions of Americans lacking insurance, their cumulative losses were proof that their business models were not sustainable in the American economy. Thus, the estimated $1.2 billion taxpayers spent on start-up costs and loans for these nonprofits has been wasted.
"The founders of these start-up CO-OPs took on the big boys in the insurance markets, challenging the core power of the health insurance sector, compared to the often kitschy and inconsequential business lines celebrated in the self-congratulatory world of social enterprise," Rick Cohen at Nonprofit Quarterly explained. "The Obama administration and Congress have in the end generated a structure of providing health insurance coverage to some Americans, but still not all."
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