Editorial: Obamacare is breaking down and bleeding tax money

Obamacare is a black hole into which taxpayer money is being poured.

It is bad enough that the union-backed Nevada Health Co-op has gone belly up with little chance of it ever repaying its $66 million federal start-up loan, since it lost $42 million in the past year and a half, but it also managed to blow through $10 million in taxpayer money in 2014 through the Transitional Reinsurance Program, which is supposed to pay 80 percent of claims in excess of $45,000 and up to $250,000. This amounted nationally to $7.9 billion in 2014, on top of the $2.4 billion in loans to start-up those 23 co-ops, like Nevada Health Co-op, several of which have already failed and all but one are losing money.

According to the Federalist, the administration arbitrarily decided to pay 100 percent of those high-cost Transitional Reinsurance Program claims, but it still wasn’t enough to cover the Nevada co-op’s expenses.

The co-op was one of two insurers in rural counties offering plans that allowed low-income customers to qualify for tax credits toward the price of the plan, but state officials say there should be other options in the rural areas by the time the co-op closes on Dec. 31.

The Nevada co-op reportedly had an administrative expense-to-premium ratio of 37 percent — almost double the 20 percent allowed by law — partly due to sky-high salaries paid to executives with ties to a union that represents casino workers. The co-op in 2013 paid more than $1 million to just three executives. That might be one place to start looking for a way to recoup taxpayer money.

The Las Vegas Review-Journal quoted an insurance executive who explained that most insurers require a 90-day waiting period to discourage people from waiting to sign up until after they become ill, but the co-op started with no waiting period and later went to a 30-day window in 2014, thus creating a costlier clientele.

Noting the Nevada co-op failure, Rick Moran at The American Thinker predicts, “The failure of the Nevada co-op serves to highlight the booby traps that are still in Obamacare — too few healthy people paying for too many sick people. Eventually, the numbers won’t add up for anybody, and the system will be threatened with collapse. At that point, Democrats will claim that the only salvation for the program will be a single-payer system run entirely by the government.”

That’s been the plan all along, as Nevada Sen. Harry Reid once admitted. Asked on public radio two years ago if the country will eventually work beyond private health insurance, Reid enthusiastically replied, “Yes. Absolutely, yes.”

Reid said the country has to “work our way past” private health insurance.

“What we’ve done with Obamacare is have a step in the right direction, but we’re far from having something that’s going to work forever,” Reid was quoted as saying by the Las Vegas Sun. “We had a real good run at the public option … don’t think we didn’t have a tremendous number of people who wanted a single-payer system,” but he could not get enough votes then.

Perhaps Democrats will have a better shot once the system is totally broken. We ask our Nevada delegation in Washington, other than Reid, to continue looking for ways to repeal and replace Obamacare.

Nevada Health Co-op office. (R-J photo by Jeff Scheid)

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25 comments on “Editorial: Obamacare is breaking down and bleeding tax money

  1. Rincon says:

    “The failure of the Nevada co-op serves to highlight the booby traps that are still in Obamacare — too few healthy people paying for too many sick people.” Seems to me the only answer is to either make more healthy people or fewer sick people or don’t treat the sick – unless there are some healthy people who don’t pay enough. Which do you propose?

  2. Rincon says:

    “The co-op in 2013 paid more than $1 million to just three executives.” Private enterprise pays an average of $584,000 a year for insurance chief executive officers of hospitals (Big insurance company CEO’s make closer to $10 million). http://www.nytimes.com/2014/05/18/sunday-review/doctors-salaries-are-not-the-big-cost.html The three Coop executives appear to average $333,333. Am I missing something? Besides, I thought you guys all say that the highly paid executives in private enterprise are worth the money. Maybe the problem is that the Coop hired the cheap guys. By your logic, higher salaries would have netted better quality executives. Perhaps your complaint is that they were paid too little?

  3. The six-figure co-op salaries are two to four times higher than the $135,000 median executive healthcare pay reported in an October 2014 nonprofit CEO compensation study published by Charity Navigator. Charity Navigator is a nonpartisan group that tracks philanthropic and charitable organizations.

    The Department of Health and Human Services’ Centers for Medicare and Medicaid Services, which oversees the federally funded co-ops, warned them in December 2011 that federal law bars the use of tax funds “to cover excessive executive compensation.”

    http://spectator.org/blog/63314/failing-obamacare-co-ops-give-execs-lavish-pay-and-may-violate-law

    I did not have room for all the comparisons.

  4. nyp says:

    wow — the Obama Administration loaned the Nevada Health Co-op “$66 billion dollars”?? Even I think that is an excessive amount.

    Thanks for uncovering that, Mr. Mitchell!

  5. Vernon Clayson says:

    It’s more complicated than this, many of the ignorant low information types out there haven’t gotten by the word “free” that was originally bandied about this health care, they don’t care or even know about signing up and the cost, DUH!!

  6. Steve says:

    When looking to get insurance (after being downsized), I found my wife’s doctor listed so I chose that insurance. It was the only one that listed her doctor. When we went to the first appointment under that insurance her doctor’s office told us they did not take that insurance. They had dropped it almost immediately because they weren’t paying claims. The office does not have a contract with NHC but NHC refuses to remove him from their list of providers.
    We (and the subsidy) are paying for one thing but getting another. The insurance still works for prescriptions and blood tests, but not for her primary doctor.

    Moreover, Nevada Health Coop administers its plans under Culinary insurance, we found this out when pushing for answers about her doctor being on their list of providers, he does take Culinary insurance….no issues there, huh?

    Had I known this (it had not yet hit the news when I signed her up) I would have made a completely different move. We can pay for the office visits, those only amount to about $300 a year. In Novemeber (should I still remain unemployed) I will be looking very closely at the insurance we choose for her.

    Meanwhile, Nevada Health Coop is lying about the little things too. Those office visits add up, I wonder who is getting that money and how they are hiding it.

  7. Nyp says:

    Hey Mr. Mitchell – you corrected an error in your original post without acknowledging the error??

    That is a real journalistic no-no!

  8. Nyp says:

    Hey Mr. Mitchell – WTF? You corrected an error in your original post without acknowledging the error??

    That is a real journalistic no-no!

  9. ronknecht says:

    Mitch — Typo. It’ $66M, not $66B. Of course as Ev Dirksen used to say … Have a great wkend.

    RK

    Ron Knecht Economist & Nevada Controller 775-882-2935 775-684-5777 http://www.RonKnecht.com

  10. Steve says:

    Read the header on the blog;

    “Musings on journalism, writing, politics and whatever amuses Thomas Mitchell for the nonce”

    This is not a newspaper Nyp, corrections are made here before the go to print. This is where the owner gets ideas into words.

  11. Nyp says:

    Good point: basic journalistic standards – like acknowledging errors and corrections – don’t apply here.

  12. Steve says:

    Because…not a newspaper……blog posts are inherently error filled.

    Consider this a preview of what makes it to print.

  13. Nyp says:

    I know what you mean. I have learned from experience not to presume the factual accuracy of anything that Mr. Mitchell posts on this blog.

  14. Steve says:

    “I have learned from experience not to presume the factual accuracy of anything that Mr. Mitchell posts on this blog.”

    Don’t presume to “know what I mean” then proceed to say things for me, that have nothing to do what I mean.

  15. nyp says:

    Here is a good example of what Steve is talking about when it comes to the factual accuracy of Mr. Mitchell’s blog posts:

    “he Congressional Budget Office on Monday said it expects the federal government will spend significantly less on Obamacare than had been projected. Instead of $1.35 trillion in costs from 2016 through 2025, Affordable Care Act-related expenditures are expected to be $1.207 trillion, the CBO said. That is an 11 percent reduction.
    The CBO said it now believes that private health insurance spending per enrollee will increase by an average of 5.6 percent per year from 2016 to 2025. That is about 10 percent lower than the rate the agency previously forecast.”
    http://www.cnbc.com/2015/03/09/going-down-cbo-says-obamacare-costs-set-to-fall.html

  16. nyp says:

    And this:
    “President Obama’s health-care law will cost taxpayers substantially less than previously estimated, congressional budget officials said Monday, in an upbeat note for a program that has faced withering criticism since its passage five years ago. The nonpartisan Congressional Budget Office attributed the savings to spending on medical care in coming years that will not be as great as previously forecast. As a result, the agency said, insurers are not expected to charge Americans as much for coverage, and the government will save on subsidies for low- and moderate-income people.What’s more, the CBO has concluded that companies are not canceling health insurance policies as often as had been anticipated earlier this year. Fewer Americans consequently are planning to sign up for insurance under the Affordable Care Act, generating more taxpayer savings.

    ““There’s certainly a lot of rhetoric by the law’s opponents that costs are going to explode, that costs are out of control, that Obamacare had no cost containment in it,” said John Holahan, an economist at the Urban Institute. “I can’t see how people can continue to say those things.” The report is one of a growing number of assessments of the law’s impact on the nation’s economy, budget outlook and health insurance market — long-debated topics since before its passage in March 2010.”

    So, Steve is absolutely correct — when Mr. Mitchell posts something on his blog — such as that ObamaCare is a dismal failure that is “bleeding taxpayer money” — there is no reason to assume that he has adhered to norrmal journalistic standards of accuracy.

  17. Steve says:

    “he Congressional Budget Office”

    Who’s Congressional Budget Office?

    And I want my 2500 dollars Obama promised me! http://www.politifact.com/truth-o-meter/promises/obameter/promise/521/cut-cost-typical-familys-health-insurance-premium-/

    And I want the insurance to cover what they SAID they would!

  18. Steve says:

    Better own up to your errors, nyp.

    Though I am glad you finally admitted politicians are full of malarky when it comes to their doomsayer climate predictions.

  19. nyp says:

    never said anything of the kind

  20. Rincon says:

    Fact is, health care costs have not skyrocketed with Obamacare as Conservatives had predicted. Wrong again.

  21. Steve says:

    Sure you did,nyp,just like you said I did!

  22. nyp says:

    “Because…not a newspaper……blog posts are inherently error filled.

    Consider this a preview of what makes it to print.”

  23. Steve says:

    THAT Explains EVERYTHING you say, nyp!

  24. […] This amounts to redistribution from the younger to the older. But since the younger people aren’t signing up, the premium rates keep climbing and the ObamaCare co-ops, despite being buoyed by federal grants and loans, are failing. […]

  25. nyp says:

    actually, younger people are indeed signing up for ObamaCare — including the insurance that ObamaCare requires insurance companies to make available to people under age 26 who sign onto their parents’ plans.

    Of course, the Republicans wish to take that away.

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