Remember when Democrats “replaced” the public option with a plan to help create fifty crippled private insurance co-ops around the country? Somehow that was supposed to be almost as good. As expected, that is not working out so well. From The Washington Post (I recommend reading the entirety of this damning article):

When the new health-care law was being cobbled together, Congress decided to establish a network of nonprofit insurance companies aimed at bringing competition to the marketplace, long dominated by major insurers.

But these co-ops, started as a great hope for lowering insurance costs, are already in danger.

While the debut of the Affordable Care Act this month has been marred by widespread computer problems, the difficulties the co-ops face have been less obvious to consumers. One co-op, however, has closed, another is struggling, and at least nine more have been projected to have financial problems, according to internal government reviews and a federal audit.

Their failure would leave taxpayers potentially on the hook for nearly $1 billion in defaulted loans and rob the marketplace of the kind of competition they were supposed to create. And if they become insolvent, policyholders in at least half the states where the co-ops operate could be stuck with medical bills.

This was entirely foreseeable. In fact many including myself and the Congressional Budget Office predicted exactly this type of outcome.

As a vehicle for reigning in private insurance companies the co-ops are basically worthless. In fact they were purposely crippled with so many restrictions to make sure they couldn’t accidentally serve this function, before the law was approved.

Of course that was never really the point. The real goal of the co-op program was always to created some excuse for kill the public option and it succeeded. It was terrible policy created as a political stunt to try to trick the Democratic base while keeping the health care industry happy. Now we are left with this weird vestige of a political con that will probably end up costing tax payers around $1 billion.

Democrats decided they would rather waste a $1 billion on a con than enact the smart policies they promised, yet they are still genuinely surprised the law was unpopular.