CoOp Flop

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CoOportunity Health, a fledgling Iowa health-insurance company set up under the Affordable Care Act, has been taken over by by state regulators and could soon go under, officials said Wednesday. CoOportunity Health is an insurance cooperative set up to give consumers and small businesses an alternative in a market with few choices. The company relied on tens of millions of dollars in federal loan guarantees provided under the Affordable Care Act, also known as Obamacare. It began selling policies in 2013. Insurance Commissioner Nick Gerhart said Wednesday morning that CoOportunity Health has about 120,000 members in Iowa and Nebraska, and only has about $17 million in cash and assets. Gerhart said the company had expected more federal money but didn't receive it. "It's a difficult situation," he said. Gerhart said customers' coverage will continue, but he expects most members will switch to other carriers by Feb. 15, the deadline for enrolling in 2015 coverage. Dana McNeill, CoOportunity's vice president for corporate communications, said the company is working with regulators to ensure a smooth transition for customers. She said she couldn't comment further. When asked if President Cliff Gold is still in charge of the company, she replied, "Nick Gerhart is in charge of the company now." About two dozen such co-ops have been set up nationally. One of the main goals was to provide choices in states, such as Iowa, where the health-insurance market was dominated by one or two carriers. CoOportunity was initially seen as one of the co-ops most likely to succeed. That was largely because its founders included David Lyons, a former Iowa insurance commissioner, and Gold, a former executive at the state's dominant carrier, Wellmark Blue Cross & Blue Shield. CoOportunity is one of just two Iowa carriers offering individual health insurance statewide on the public online marketplace, healthcare.gov, which was created under the Affordable Care Act. Wellmark has declined to participate. The only other Iowa carrier selling policies on the public marketplace is Coventry Healthcare, which is owned by Aetna. That's especially important to moderate-income people who want to obtain Obamacare subsidies for insurance. Those subsidies are only available for policies sold on healthcare.gov. CoOportunity Health has received about $146 million in federal money, according to documents filed in Polk County District Court. The company said a recent move by Congress would limit how much it could obtain in "risk-spreading" money under the Affordable Care Act. Such payments are supposed to help carriers that take on customers with relatively high risks. CoOportunity said the Congressional change could cost it $60 million. The court papers say that CoOportunity's net cash and investments had dropped from $121.5 million on Oct. 31 to $17 million on Dec. 12. The insurance division said the company is no longer taking applications, and anyone who signed up with it after Dec. 16 will need to switch carriers. In a question-and-answer column posted on its website, the division says the company "is in a hazardous financial condition." The column raises the possibility that CoOportunity might go out of business. If so, it warns customers, "your coverage may be limited. State statutes create a safety net to protect policyholders when insurers go out of business. Those statutes cap coverage at $500,000 per life." The column says people who want to switch carriers can contact an agent or counselor, or go to www.healthcare.gov. Signs of possible trouble appeared in October, when CoOportunity pulled out of a state program that uses federal Medicaid money to pay private-insurance premiums for thousands of relatively poor Iowans. Gold said at the time that the company lost money on the 9,700 Iowans it had covered under that program, called the Marketplace Choice Plan. Coventry is the only carrier still participating in the program.

CoOp Flop