The government provides billions of dollars in loans for the co-ops, but in recent months, federal regulators have informed many co-op officials their finances, enrollment and business models need improvement.
CMS recently sent warning letters to 11 financially ailing co-ops and placed them on “enhanced oversight” or required them to create a plan of “corrective action,” or both, according to the report. Amidst heightened monitoring, one co-op has closed, and three others are preparing to shut down in late December.
The first plan to shut down, CoOportunity Health served people in Iowa and Nebraska. It occurred in February after insurance regulators seized control. Louisiana Health Cooperative revealed in July it will shut down by Dec. 31. In September, New York’s co-op, the largest in the nation, closed.
CMS says increased scrutiny is required to help support faltering plans and prevent hasty shutdowns that would force consumers to obtain new coverage in the middle of the year, according to the report. Federal health officials have said they may make more closure announcements before the Nov. 1 open enrollment start date.
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