Friday, February 26, 2016
The Federal Government is being sued by an entity that was entirely funded by...the Federal Government.
Yes, you read that correctly. According to the Portland Tribune Oregon Co-op Health Republic has filed a $5 Billion dollar class action lawsuit on behalf of all of the insurers who didn't receive funding from the Risk Corridor program. The lawsuit was filed on February 24th in federal claims court against the United States of America, acting through HHS and CMS. In the lawsuit Health Republic of Oregon claims that for 2014 and 2015 they are owed roughly $22 million dollars in Risk Corridor payments.
The Risk Corridor program was designed to fund insurance companies who lost money on Obamacare policies with money from insurance companies who were profitable on Obamacare policies. The Obama administration assured companies that the program would be deficit neutral, but guess what happened? Essentially nobody was profitable. (shocked face) Instead of companies receiving $2.7 Billion in payments they will only receive $362 Million - a shortfall of over $2.5 Billion. While the language in Obamacare isn't clear, it was assumed that if there was a short fall that HHS would simply authorize the fund to be paid out. This changed when Republicans in Congress inserted language in the budget bill that required the program to be deficit neutral - exactly how the Obama administration had portrayed the program.
In its previous life Health Republic is the artist formerly known as the Freelancers Union. The head of Freelancers was none other than Obama favorite Sara Horowitz. (ed note: good gracious how many times have we documented this relationship) What makes this lawsuit "special" is how this company was started in the first place.
Health Republic is an insurance cooperative. Health insurance cooperatives were created by Obamacare to compete against traditional insurance companies. They were promoted as more affordable non-profit insurance companies that would save consumers on premiums. They were fully financed by revenues generated through the (un)Affordable Care Act with low/no interest loans.
Freelancers/Health Republic received three loans for their three entities - Health Republic of New Jersey, Health Republic of New York, and Health Republic of Oregon. In total they received $435 million dollars to start up and sell insurance in their respective states. Now, only two years into Obamacare and both New York and Oregon have gone belly up. Oregon burned through their $61 million - plus premiums - and only had 15,000 members at the end of their run in 2015.
Now they want their money - more appropriately, taxpayer money - to help bail them out. Knowing the DOJ and the Obama Administration they will find a way to make it happen.
Posted by Patrick at 8:16 AM