The ninth taxpayer-funded Obamacare insurance startup has decided to close down, another victim that blames few federal dollars for the closure.
South Carolina’s Consumers’ Choice Health Insurance Company said Thursday it would not offer plans in 2016. It is the ninth of 23 Obamcare-funded co-ops to announce it would not offer plans.
South Carolina’s co-op follows four other co-ops that have decided to close up shop in the past two weeks. The co-ops were created to offer more competition for consumers on the Obamacare health insurance exchanges.
The impetus for South Carolina and many of those states is a lack of funding from Obamacare’s risk corridor program, which seeks to reimburse insurers for taking on more sicker and older Americans.
The program makes insurers pay the government if profits reach a certain threshold, and in turn gives other insurers money if their losses reach a certain level.
But Congress required the program to be revenue neutral, meaning it could pay out only what it takes in. In the latest year the program had too many requests for payments and not enough insurers paying in.
As a result, insurers requested more than $2 billion but only got $365 million.
South Carolina said the recent announcement was a death knell for the program.
It cast doubt on the “collectability of tens of millions of dollars through the federal risk corridor program and led to an unavoidable outcome,” said Jerry Burgess, President and CEO of Consumers’ Choice.
South Carolina will continue to offer coverage to its approximately 67,000 members and small businesses, but they will have to shop for new coverage when open enrollment starts next month.
House Republicans were furious at the latest closure.
“Just when you think the news can’t get any worse, it does. South Carolina now makes nine failures to the tune of nearly $1 billion for taxpayers,” said Rep. Marsha Blackburn, R-Tenn., the vice chairwoman of the House Energy and Commerce Committee.
The Obama administration did not immediately return a request for comment as of press time.
But it has previously said that it expected some co-ops would close since they are insurance startups. The administration said it goes out of its way to help co-ops remain viable and will continue to do so.
