8 things to know about insurance co-op closures

Listen
Text
  • Small
  • Medium
  • Large

Eight of the original insurance co-ops formed under the Affordable Care Act have shut down this year.

Only 15 of the original 23 co-ops will offer coverage next year, according to The Hill. Many of the co-ops have blamed low payouts from the risk corridor program for their collapse. The program was designed to collect money from insurers faring well and give it to those that were struggling.

Here are eight things to know about the insurance co-op closures.

1. The co-op serving Iowa and Nebraska shut down in February. CoOportunity Health was one of the country's largest co-ops concerning membership and the federal funding it received. But it soon began facing financial difficulties, including receiving more medical bills than anticipated. The co-op believed more federal dollars were coming its way, but when it didn't happen, CoOportunity closed its doors.

2. Louisiana Health Cooperative plans to close by the end of the year. In July, the nonprofit insurer in Louisiana said it will not offer coverage in 2016. One key issue contributing to the shutdown was low enrollment. In 2014, Louisiana Health Cooperative expected to enroll 28,106 members but only signed up 7,773. As of July, slightly less than 14,500 members total had enrolled, according to The Advocate.

3. In July, Nevada Health CO-OP stated its plans to close. The Nevada insurance co-op will shut down by Dec. 31 due to challenging market conditions. "With a second year of high claims costs and limited opportunities for new investment, it has become clear that the amount of growth required to provide quality care at reasonable rates will be unlikely in the next plan year," said NHC CEO Pam Egan in a news release.

4. September marked another closure when New York's co-op shut down. New York and federal regulators ordered Health Republic Insurance of New York, the nation's largest co-op, to close earlier this fall. Regulators deemed the co-op likely to become financially insolvent. HealthRepublic said it plans to process claims through the end of the year.

5. Kentucky Health Cooperative recently said it won't offer plans for 2016. According to Glenn Jennings, interim CEO of the co-op, shutting down was unavoidable due to small amount of funding it would receive. In early October, CMS said insurers would receive $362 million in risk corridor payments for 2014, or 12.6 of the $2.87 billion requested.

6. Tennessee's co-op closed less than a week later. Community Health Alliance, which enrolled 27,000 Tennesseans, said it will shut its doors by the end of the year. Commissioner Julie Mix McPeak said the state decided to cut the co-op upon learning it would receive less than expected through the risk corridor payment.

7. On Friday, the Oregon co-op Health Republic Insurance said it will shut down. "The government's refusal to honor its risk corridor obligations represents a negative financial impact of over $20 million," said Dawn Bonder, CEO of the co-op. "This has placed us in a difficult financial position that could jeopardize our members and partners." Health Republic Insurance insured 15,000 individuals and 800 small businesses.

8. The same day, Colorado's co-op said it will shut its doors. But unlike the other co-ops, Colorado HealthOP did not easily accept its fate. When the state Division of Insurance decided to shut it down, Colorado HealthOP, which said it's in a "strong financial position," protested the choice. "We are astonished and disappointed by the Colorado Division of Insurance's decision," said CEO Julia Hutchins in a statement. "It is both irresponsible and premature."

Copyright © 2021 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars