Supporters of the public option would still face major political opposition, says one expert, who says he is not optimistic that the PPACA will be amended.
With only seven nonprofit, member-run health plans left to participate in this year's open enrollment, critics of the Patient Protection and Affordable Care Act are pointing to the disappearance of the co-ops as further evidence that the law is founded on unrealistic goals and doomed to fail.
But that's not necessarily so, and the loss of so many co-ops could revive a proposal that did not make it into the PPACA.
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The loss of the co-ops does hamper some of the most ambitious goals of the PPACA because they provided some of the most cost effective care. There were 23 co-ops in 2014 and only 10 are still around.
Three of those, in Connecticut, Ohio, and Oregon, are bankrupt and will be gone before the next enrollment period. Those plans covered more than a million people in 2015, but that number is now down to about 400,000.
Some consumers see the co-ops as good alternatives to commercial health plans, primarily because they tend to have lower premiums. Individual consumers may be unhappy at losing the co-op choice, but the impact on the PPACA and the healthcare system should be minimal, says Timothy Jost, JD, a law professor at Washington and Lee University in Virginia who is known for his expertise in healthcare law.
He notes that the co-ops were added to the PPACA at the last minute to throw a bone to those who wanted a public option, which didn't have enough political support.
No Surprise Co-ops are Disappearing
The co-ops were at a disadvantage from the start, Jost says, because the law imposed limits on how funding could be used and required startup loans to be paid back in five years. Then Congress sharply reduced funding for the program.
Co-ops also were less experienced than commercial plans and made missteps with setting premiums too high or too low. So it's no surprise that the co-ops are disappearing. With the hurdles they faced from the beginning, Jost says he is surprised that there are any co-ops left.
"It shows that this was never an adequate substitute for the public option," Jost says. "The loss of the co-ops will have little effect on the ACA because they were not necessary for the ACA's success, but in the markets where they are closing, we are going to see some areas with very little competition."
Jost says the loss may breathe new life into the idea of a public option, especially since Medicare Part D already has some elements of one. Publicly, at least, centrist Democrats are wary, however.
"The Medicare Part D drug program has bipartisan support and it has exactly the same premium stabilization program as the ACA except that they're more generous. Medicare Part D also has fallback plans where, if there aren't enough insurers in a particular market to create competition, the government will contract with an entity and take on all the risk, paying the claims and administrative expenses," Jost says.
"It's not exactly a public option, but it is at least a potentially better, stable kind of arrangement than the co-ops."
Public Option 'A Tough Sell'
The government has not needed to use the fallback program, but its inclusion in the popular Medicare Part D gives it a legitimacy that public option proponents can draw on, Jost says.
Supporters of the public option would still face major political opposition, so Jost says he is not optimistic that the PPACA will be amended. A public option would be a tough sell to a Trump administration and only somewhat easier to a Clinton administration, he says.
"We would have been much better off if we had set up a health plan option like the fallback in Medicare Part D, rather than trying to launch new insurance companies," he says. "That was the right idea back then and the failure of the co-ops just underscores that."
Gregory A. Freeman is a contributing writer for HealthLeaders.