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By Ron Brzoska

A few weeks ago, several local outlets ran a story about, in a wonderfully bi-partisan move, a small start-up business was being recommended for a $150 million dollar federal loan so they could build Illinois’ healthcare exchange under the Affordable Care Act. ( http://www.modernhealthcare.com/article/20121011/INFO/310119991/illinois-governor-senators-back-proposed-health-insurance-co-op# )

The company, SimpleHx, was founded by a group of MBA candidates from Northwestern University last year. From looking at there website, www.simplehx.org, it doesn’t appear that they have any clients yet. Their website reads more like a business prospectus for investors rather than information on a fledgling business or non-profit. They refer to their “members”, but they make no mention of the names of their leadership. Somehow, this group has won the support of Governor Pat Quinn (D), Senator Dick Durbin (D), Senator Mark Kirk (R), Representative Jan Schakowsky (D), and Representative Mike Quigley (D). They are being recommended for a $150 million dollar loan from the tax payers to help make healthcare more affordable.

Let’s try to make some sense of this. The so-called Affordable Care Act provides for loans in the ranges of $100 million to $200 million dollars to one company in each state for the purpose of setting up a health insurance co-op. In the case of SimpleHx, they are being recommended as the group to run a state health care exchange without any previous experience. Wouldn’t you like to have a senator recommend you for a $150 million dollar loan based only on your good idea? How about the fact that to save money on healthcare, we are being told that our tax dollars need to be used to create a brand new company?

If you can get past the idea that a $150 million dollar loan will save us all money, then you might still be curious as to how this infant company was able to pull off such big name endorsements. I sure was.

It took a little effort, but I found another story on SimpleHx that finally gave me the names of some of these partners. ( http://dailynorthwestern.com/2012/10/24/campus/kellogg-students-seek-approval-for-first-illinois-health-insurance-co-op/ ) The main players are Dr. Elmer Abbo, Coe Schlicher, and Elliot Richardson. The following link shows that Dr. Abbo has made donations to the campaigns of Jan Schakowsky and four to President Obama. http://www.corporationwiki.com/Illinois/Chicago/elmer-abbo/88126441.aspx

I could not find direct contributions from Coe Schlicher, but his father-in-law has been a donor to the Democratic Party for years. http://www.corporationwiki.com/New-York/New-York/richard-roedel/62940754.aspx

Elliot Richardson is the person who makes the political contacts for SimpleHx. He ran for congress in the 10th Congressional district…

… Mark Kirk’s former office… http://www.nbcchicago.com/news/politics/Elliot-Richardson-for-10th-Congressional-District-69906412.html

I cannot say for a fact that any impropriety has taken place, but I can say that the signs are there to warrant further scrutiny. I just wish that the professional journalists would do their jobs and get to the bottom of this and other issues rather than being cheerleaders for corruption.

8 Comments

  1. Co-ops and Exhanges, while both established under Obamacare, are actually two different things. The Exchange is a market on which health plans (including co-ops, but also including plans from more traditional insurance companies) will be sold. Exchanges are operated by the government or by separate organizations designated by the government. Co-ops are just single plans that will be offered through the Exchanges

    • Thanks for the distinction. However, the point that hundreds of millions of our tax dollars are being used to fund a start-up business in the name of savings, and that the selection may be based more on clout than merit, is disturbing.

  2. I’m glad that someone else responded to give you the correct info about the difference between an Exchange and Co-op. Part of the ACA – groups may create a co-op for the state…a couple rules to this 1. they are for small business owners to help control the cost of health premiums 2. They are non-for-profit health plan 3. they need to be available across the entire state (this being the hardest part) because they need to get hospital and doctors to join this network group.
    Presently their are (4) groups trying to get accepted by the Fed’s to do this in Illinois. The Fed’s have said that they will probably pick one in Illinois but they could also go up to two.

    • And where does it make sense that $150 million dollars should be given to any company, let alone one that is not serving anyone today, to run a statewide Co-Op? I’m also not sure how one company can provide the competition required to provide the incentive to drive costs down. If the government’s answer is to provide another company another loan, then my next question is “How much money is really being saved when tax dollars are being moved from shell to shell?”

  3. it’s really not a company…this grant funding is to get the program up and running so if someone joins the network there will be funds to pay for the claims should when they come up. Think about this – small business owners have had over 180% increase in premiums over a 5yr period prior to 2011. Also Illinois as never allowed co-op plans prior to the ACA. This is a not-for-profit plan and lets hope it does what it should do and keep cost down for small business owners who provide benefits to their employees. Our back bone of this country is the small buisness owners and we should do something to assist them – it’s the RIGHT THING TO DO!

    • You are right, we should help our small business owners. It IS the right thing to do. I don’t see how a grant to an unknown entity accomplishes that. I don’t see how taking $150 million dollars from one bucket and depositing it in another produces a net affect of cost savings. For the sake of argument. let us say that our small business owners are middle class. We are asking them to pay more in taxes (this $150 million has to come from somewhere) instead of paying more for health insurance. We are still hitting the pocketbooks of the small business owners and their customers. How does that help anyone? If this non-profit, or any non-profit, really could reduce premiums, they would be the #1 choice on the open market. They would end up being an enormously successful for profit company. Calling an entity non-profit doesn’t directly correlate to having a financially a sound or responsible operation. It just means you don’t turn a profit. A terribly run company that loses money is a non-profit in the accounting sense of the word. This is where I am coming from.

      Basketball Fan, I see that you have positive attitude about the ACA. That is good. I hope that your dreams for this program come true, and my nightmares do not.

      PS – Could you please share with me your data on the 180% increase in insurance premiums to small business owners since 2006? The data that I have been able to find only shows a real dollar value increase of 84% since 1999. http://smallbiztrends.com/2012/08/frightening-statistic-small-business-health-insurance.html
      While even that is a catastrophe, it helps discussion when we can see the data that fuels our assumptions. It can also help us agree on matters and find solutions.

  4. Hello there, just became aware of your blog through Google, and found that it is truly informative. I am going to watch out for brussels. I’ll appreciate if you continue this in future. Lots of people will be benefited from your writing. Cheers!

  5. Just discovered your blog with this post. Great story here. You’d think our experience with Stu Levine and the Illinois Health Facilities Planning board would have taught us how Government brings a wicked kind of corruption into our lives when given the power to make rules. What an ongoing nightmare ACA’s going to be for America.


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