Obamacare Co-op Failure in NY Leaves Doctors Owed Millions


The sudden collapse of the largest nonprofit insurance cooperative created by President Barack Obama’s health care law is causing headaches in New York, especially for medical providers owed millions of dollars for treating the failed plan’s patients.

More than 200,000 people insured through Health Republic Insurance of New York have until Monday to sign up with another company if they want to maintain coverage in December.

State regulators ordered the insurer to shut down at the end of the month because of severe financial problems. They are also investigating what they say were inaccurate financial filings by the company.

The closure — part of a wave of failures of the new co-ops nationwide — has been a big hassle for Health Republic policyholders, who have had to shop around quickly for alternative coverage.

The situation may be worse, though, for doctors, hospitals and other clinicians. They are legally obligated to continue treating Health Republic patients through the end of the month but have been given no assurances they will ever be paid for that care.

“I’m aware of at least two physicians who have gotten checks from Health Republic, and those checks have bounced,” said Dr. Joseph Maldonado, president of the Medical Society of the State of New York.

Two groups that represent hospitals, the Health Care Association of New York State and the Greater New York Hospital Association, said their member facilities are already owed at least $150 million, not including care provided in much of November.

Medical practices are likely owed millions of dollars more. A survey of 800 doctors found that 43 percent were owed money by the company.

Health Republic Insurance of New York was one of 23 nonprofit health cooperatives created nationwide by Obamacare, and was, by far, the largest of those to fail. The companies, backed with $2.4 billion in taxpayer-financed loans, were supposed to be lower-cost alternatives to the private insurers that dominate the marketplace.

Most, though, have struggled mightily. At least half will have shut down by the end of this year, just two years after they began operating. Experts blame poor management, low premiums and not enough startup funds. Republicans in Congress have criticized the initiative as a giant waste of money.

Health Republic received $241 million in federal loans. The company’s ability to repay that money is unknown.