(Bloomberg) — Obamacare's startup health insurance plans are flirting with financial distress, as all but five of the 23 nonprofit companies had negative cash flow from operations in the first three quarters of 2014, Standard & Poor's said in a report today.
The startups, called Consumer Operated and Oriented Plans, or co-ops, were created with $3.4 billion in federal loans as a counterweight to established health insurers. One of the largest of the companies, Iowa-based CoOportunity, has failed already and is being liquidated by the state.
Republican critics of the law have long warned that the co-ops would struggle in competition with larger carriers such as Anthem Inc. and UnitedHealth Group Inc. While some of the co-ops rung up impressive market share in the first year coverage was offered on the marketplaces created by the Affordable Care Act, most are losing money and face further challenges in 2017, when federal subsidies financed in part by surcharges on private health-insurance plans will expire.
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