Image source: White House on Flickr.

The controversy surrounding Obamacare, known officially as the Patient Protection and Affordable Care Act, doesn't appear any closer to dying down, even though two and a half years have passed since the law went into effect.

Over that time span, Obamacare has brought some real benefits to select consumers. According to a recent update from the Centers for Medicare and Medicaid Services, 11.1 million people were enrolled through a marketplace exchange and paying their monthly premium as of March 31, 2016. A similar number of low-income individuals and families have gained access to health insurance through the expansion of Medicaid in 31 states. Combined, this has reduced the nation's uninsured rate from 16% in the year before Obamacare took effect to just 9.1% as of the end of 2015.

But questions surrounding Obamacare's sustainability and affordability continue to swirl.

Controversy plagues Obamacare

One of the ways Obamacare was designed to promote competition and reduce premium inflation was by having insurers list and promote their health plans on a marketplace exchange. The federal government currently handles the marketplace for 38 states, while the remaining dozen states operate their own exchanges. This was meant to empower consumers by allowing them to make straightforward, transparent plan comparisons. It's debatable how well this has worked, given that some consumers still aren't fully aware of their options, but it's certainly a step in the right direction.

Image source: Getty Images.

Obamacare has two other features designed to lessen the impact of premium inflation. One is the risk corridor, a risk-pooling fund that collects money from overly profitable insurers and pays money to unprofitable insurers in order to protect them from excessive losses. The other is the approval of 23 healthcare cooperatives, or co-ops. Co-ops are healthcare organizations run by the people, for the people, and thus they were expected to be cost-competitive, with more focus on providing care than on lining their pockets.

These latter two methods have been an utter failure, as we recounted last week. The risk corridor simply didn't collect much money from overly profitable insurers, so it only paid out about an eighth of the $2.9 billion money-losing insurers requested in assistance. This left unprofitable insurers with a tough choice: close up shop or jack up their premium prices, which were obviously too low.

Are Obamacare's 23 co-ops destined for failure?

In the case of Obamacare's 23 approved healthcare cooperatives, they're choosing option No. 1. Sixteen of Obamacare's 23 healthcare cooperatives have now either shuttered their doors or announced their imminent closing, including three that failed this month. More than $1.7 billion in federal loans may not be recoverable, and well over 800,000 people will be looking for new plans in the coming weeks or months. 

Image source: Getty Images.

But here's the thing: It may not be over yet.

According to The Washington Free Beacon, Kevin Counihan, of the Centers for Medicare and Medicaid Services, told lawmakers on Capitol Hill last week that six of the remaining seven co-ops have been placed on "corrective action plans." An insurer is placed on a corrective action plan when the CMS finds deficiencies in its finances, operations, or marketplace exchange compliance.

In this instance, we're most likely talking about financial deficiencies. It's unclear at this point which lone co-op is in the best shape -- or if any of the co-ops are even sustainable or profitable. Given the precipitous decline in their financials, it's not out of the question that all 23 co-ops could eventually be forced out of business, and some $2.5 billion in loans given to these co-ops could be unrecoverable.

The big loser is the middle-class consumer

As noted above, these 23 co-ops were designed to be cost-effective health insurance machines with low premiums that would help control premium inflation. These co-ops had no issue attracting consumers, but I doubt they were prepared for how much sicker and more expensive Obamacare enrollees are compared to enrollees in employer-sponsored health plans.

According to a large analysis from the Blue Cross Blue Shield Association, Obamacare enrollees are about 22% more expensive on a monthly basis than employer-based enrollees, which shouldn't be much of a surprise: Many current Obamacare enrollees were previously denied coverage due to pre-existing conditions, but under Obamacare, insurers can't turn consumers away for having pre-existing conditions.

Obamacare's co-ops may have also lacked the experienced leadership you find at national insurers, although even this point is arguable. For instance, UnitedHealth Group (UNH -0.94%), the largest insurer in the country, hasn't been able to figure out how to turn a profit under Obamacare. It's expected to lose around $500 million in 2016 from its Obamacare plans in 34 states, and it has chosen to dramatically reduce its Obamacare exposure in 2017. Other insurers, such as Anthem and Centene, have placed more emphasis on government-sponsored enrollees and have thrived.

Image source: Getty Images.

However, the biggest loser here isn't the 16 failed co-ops. It's the middle-class consumer or family that makes just over 400% of the federal poverty level and doesn't receive the advanced-premium tax credit (APTC), which subsidizes Obamacare premiums.

The co-ops were a low-cost option for these individuals and families, and they were designed to help keep national insurers' premiums in check. Without these co-ops, national insurers will face less low-cost competition, presumably improving their pricing power. We could already be seeing this pricing power creep through: The Kaiser Family Foundation forecasts that the lowest-cost silver plan in 14 major cities across the U.S. could rise by 11% in 2017.

The roughly 9.4 million consumers on the marketplace exchanges receiving the APTC are mostly insulated from these price hikes, but the middle-class consumer who doesn't receive a subsidy could be in big trouble if premium inflation accelerates.

It's unclear what the future holds for Obamacare's remaining co-ops, but it's in your best interest to pay close attention, as the outcome may have a direct bearing on your wallet and how you receive medical care in the future.