Back in the middle of November we covered the announcement that one of the largest New York health insurance providers under the Obamacare co-op umbrella was in trouble. Health Republic had jumped on the Affordable Care Act bandwagon and signed up nearly a quarter million new subscribers, offering cut rate prices and surging to the top of the market in that area. Unfortunately, the expected cash bonanza from the government program failed to live up to expectations and the company quickly ran out of operating capital. Yesterday was the end of the line for Health Republic and they closed their doors.

Unfortunately for the citizens of New York, this failure didn’t just represent a blow to the company’s profits and the reputation of the White House’s signature legislative achievement. There have been real world consequences for the people who signed up for the plan, including running into doctors who won’t even accept appointments from people using the company’s services. (From The Watershed Post)

The shuttered company is no longer paying its claims, leaving doctors unsure whether they will ever be paid for seeing Health Republic patients. Some doctors have turned patients away, or are bargaining directly with patients over their medical fees… Health Republic’s collapse has forced a panicked scramble among patients and doctors in upstate New York. Local doctors have worried that Health Republic will default on bills, and at least one practice, the Llobet Medical Group, has turned away patients who have Health Republic insurance. “This was one of the biggest disasters ever,” said David Cordner, an administrator at Llobet Medical Group, a primary care practice with offices in Margaretville and Kingston. “I don’t understand why New York didn’t see this a lot sooner. Nobody got paid. Where was the money going?”

Where was the money going? Several New York legislators are asking exactly that question since a lot of taxpayer dollars were flushed down this rat hole before it was finally closed. Health Republic had received $265 million in federal loans to get started and that money has pretty much evaporated. Two state senators along with U.S. Congressman Chris Gibson have called for an investigation and are asking Governor Andrew Cuomo to explain where the money went and what he plans to do to ensure this doesn’t happen again.

“$265 million of taxpayer money disappeared and 215,000 New Yorkers are facing turmoil in their healthcare coverage,” he told the Watershed Post. “There is no question that there needs to be an investigation to see where there was wrongdoing. This happened on Governor Cuomo’s watch.”

Some of the personal stories which Watershed Post dug up are precisely the sort of outcome which people had feared, They talked to Candace Rudd, the owner of a hair salon, who called her doctor for an appointment and was told that her insurance was no longer accepted. They were willing to give her an appointment, but wanted a $100 cash payment to get in to see the doctor. Whether or not she’s able to afford that, there are far too many families who couldn’t in upstate New York’s struggling economy.

This is the larger, national potential for Obamacare on a local level. More than half of the state exchanges have closed at this point and nearly all the rest of them are in financial peril. But with the law in place, what happens to all of the collapsed segments of the system? Legally the states can’t simply walk away, but someone still has to pay the bills. Care to guess who that’s going to be?

I’ll give you three tries and the first two don’t count.