Nonprofit Health Insurers (Co-ops) Go Under

I’m sitting here trying to figure out what I could possibly write about on an economics blog. While flipping through the recent Bloomberg Businessweek magazine, an article caught my eye with fun little comics entitled, “Your Health Plan Will Now Self-Destruct.” This topic interests me as I am responsible for choosing the health plan(s) that the company I work for offers to its employees. Our company has seen the cost of healthcare nearly double over the last few years, and we often wonder how we will be able to continue to afford it in a few years at this rate.

The demand for skilled workers has also increased lately. In turn, those skilled workers demand good benefits including health insurance. But, the supply of skilled workers seems bleak. I must admit, the U.S. economy does seem to be improving. Furthermore, as the economy improves, the demand for skilled workers increases. This requires companies to pay a higher price to keep their skilled workers.

While browsing the internet earlier, I even found an advertisement from McDonald’s stating they now offer health insurance. It appears this is their new recruitment technique. You can check out the details here: McDonald's USA Announces New Employee Benefit Package Including Wage Increase and Paid Time Off at Company-Owned Restaurants.

But getting back to the original article, Tozzi (the author) reports that the Obama administration loaned $2.4 billion to establish 23 health insurer co-ops. Ten of those co-ops have already gone under. If you are interested in how much that cost the government – it’s $1,072,174,773. Yes, over one billion dollars was loaned to co-ops that have failed. At least half a million people now have to find new coverage. I’m sure many people have also lost their jobs. I guess we will just have to wait and see how the ACA will continue to affect the economy.