Editorial Board, Wall Street Journal:
At the direction of state insurance commissions, receivership groups called guaranty associations wind down troubled insurers and sell off assets. But under the guaranty process, any pending or outstanding obligations to policyholders, doctors or hospitals after liquidation are then transferred to all other insurers doing in-state business, based on market share.
So ultimately all consumers will pay for the co-op implosion as their IOUs are passed to commercial insurers. Guaranty associations typically are financed ex post facto, depending on how much is required, so no one can know how bad the arrears will be. But they will not be negligible, and not all the runoffs will be orderly.