The progressive dream known as the Nevada Health CO-OP remains a running fiasco.
The insurer — like many other state “consumer-oriented and customer-operated plans” created under Obamacare — went broke last year in a flurry of mismanagement and union cronyism. But now, patients who incurred medical costs while enrolled in the plan face dunning letters and collection notices from doctors, hospitals and other health-care outfits.
The Review-Journal’s Jennifer Robison reported on Sunday that the defunct CO-OP hasn’t paid a claim since at least October, despite having $17.3 million in the bank as of March. The Nevada Division of Insurance took over the troubled insurer last fall, but isn’t answering questions.
As part of the bankruptcy, a District Court judge in October barred providers from trying to collect outstanding medical debts directly from patients. But as Ms. Robison reported, some doctors and medical businesses are ignoring that order, leaving former patients in a bind.
All this just adds insult to injury.
The CO-OP model was an unfortunate act of wishful thinking, a set-up designed to appease hyper-liberals agitating for a complete government takeover of health care. No evil insurance companies or profits to deal with, just small-scale operations funded with federal handouts and run by those with big hearts for the benefit of anybody who needed medical care.
The law even banned the CO-OPs from hiring executives with ties to the insurance industry. In addition, these insurers could not raise independent capital or turn a profit. Quite a business model. In essence, the CO-OPs would be run by amateurs playing with other people’s money.
Not surprisingly, the experiment blew up. By last November 12 of the 23 CO-OPs – including Nevada’s – were belly up and federal taxpayers were out $1.2 billion.
Many Democrats blame congressional Republicans for the failure because the GOP blocked efforts to keep taxpayers perpetually on the hook for covering losses or subsidizing premiums. In reality, the CO-OPs were victims of poorly crafted legislation and mismanagement.
In Nevada, for instance, the CO-OP essentially operated as a Culinary union slush fund. The three “sponsors” that received the initial $65.9 million in federal start-up funds were all tied to the Culinary.
A January report required under the bankruptcy proceedings also revealed that the insurer was top heavy with administrative costs and paid millions to contractors to outsource various functions — some of which were never executed. The biggest beneficiary, Ms. Robison reports, was UNITE HERE, parent of the Culinary’s Health Fund, which grabbed $5.5 million from 2012 to 2014.
Meanwhile, the Nevada CO-OP’s management team included several former Culinary officials. Tom Zumtobel, once the vice president and president of the Culinary Health Fund, made as much as $428,000 a year as the CO-OP’s chief executive officer. The treasurer of the union’s health fund, Kathy Silver, pocketed $375,000 annually as president.
Now, had any of this gone on at a for-profit insurance company, you can bet Democrats and union officials would be calling for the greedy executives to face criminal charges and jail time. Instead, former Nevada CO-OP customers now endure harassment from health-care providers stiffed by the insurer.
The silence is deafening.