Fiscal Deal Could Make Health Insurance More Expensive

| Fri Jan. 4, 2013 4:38 PM EST

Conservative websites have been giddy in recent days because the fiscal deal President Barack Obama just signed repeals a piece of Obamacare—a long-term care program for the disabled that even the administration admits was not cost effective. But another section of the Affordable Care Act bit the dust at the same time, and consumers who will soon be required to purchase health insurance (i.e. everyone) should be none too happy about it.

The ACA established a federal loan program to subsidize nonprofit CO-OPs (consumer oriented and operated health insurance plans) so that these plans could participate in the new online health insurance exchanges with traditional plans. The goal: increasing competition and reducing costs for consumers. Half of the $3.8 billion allocated for the program has already been doled out to 24 nonprofits in 24 states, but the remaining $1.9 billion was slashed in the recent tax-cut deal.

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The alternative CO-OPs were meant to be a sort of substitute for the doomed public option, as Sarah Kliff explains at the Washington Post, experimenting with member-run, cost-cutting means of delivering healthcare.

The umbrella organization representing the co-ops, the National Alliance of State Health CO-OPs, slammed the last-minute fiscal deal as a win for big insurance interests.

"Since long before the fiscal cliff agreement, the big health insurance companies have fought the new CO-OPs because they represent a real opportunity to lower health insurance premiums and allow consumers to belong to a member-governed heath insurer," NASHCO President John Morrison said in a statement Thursday. "The cut to the CO-OP program was not about federal spending....It was about the health insurance giants attempting to eliminate competition at the expense of millions of Americans who will pay higher premiums due to a lack of competition."

"This fiscal cliff agreement gives the health insurance giants their wish," Morrison added. "Unless something is done to reverse this travesty, half of our country will have access to innovative, efficient, member-governed non-profit health insurance, and half will not."

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