More Healthcare Co-ops Shutter as Open Enrollment Approaches

Consumer Operated and Oriented Plans (or co-ops) continue to falter and fold with the open enrollment period just around the corner. Out of 23 co-ops created by the Affordable Care Act to offer competitive health insurance plans, nine have failed or announced they will not offer policies in 2016.

Another nonprofit health insurance company announced it is closing only days before the next open enrollment period begins, leaving thousands of individuals to shop for new coverage.

Arches Health Plan, which was established in Utah through the Affordable Care Act, announced Oct. 27 that it was ordered by Utah's State Department of Insurance to close. The company will not offer health insurance policies in 2016 and the 35,000 policyholders who purchased its plans through the exchange will have to shop for new health insurance for the coming year. Those currently covered by Arches Health Plan will continued to be insured, up to when those policies expire Jan. 1.

The announcement was not shocking, as other Consumer Operated and Oriented Plans (or co-ops) have faltered and folded. Of 23 co-ops created by the Affordable Care Act to offer competitive health insurance plans, 10 have now failed or announced they will not offer policies in 2016.

Below is a list of the cooperatives that received loans in the form of federal grants created by the Affordable Care Act. The 13 co-ops that are bolded are the ones that will continue to sell policies in 2016.

State

Co-op Awarded a Federal GrantLoan Amount ($MM)Date Awarded

Arizona

Compass Cooperative Health Network (Meritus Heatlh Partners)$93.36/8/12

Colorado

Colorado Health Insurance Cooperative, Inc.69.37/27/12

Connecticut

HealthyCT, sponsored by the Connecticut State Medical Society (CSMS)75.86/8/12

Illinois

Land of Lincoln Health (Metropolitan Chicago Healthcare Council CO-OP)160.112/21/12

Iowa and Nebraska

Midwest Members Health112.62/21/12

Kentucky

Kentucky Health Care Cooperative58.86/22/12

Louisiana

Louisiana Health Cooperative, Inc.659/28/12

Maine

Maine Community Health Options (MCHO)62.13/23/12

Maryland

Evergreen Health Cooperative, Inc.65.59/28/12

Massachusetts

Minutemen Health, Inc.88.48/31/12

Michigan

Michigan Consumer’s Healthcare CO-OP71.55/18/12

Montana

Montana Health Cooperative58.12/21/12

Nevada

Hospitality Health CO-OP65.95/18/12

New Jersey

Health Republic Insurance of New Jersey107.22/21/12

New Mexico

New Mexico Health Connections70.42/21/12

New York

Health Republic Insurance of New York174.40/21/2012

Ohio

Coordinated Health Plans of Ohio, Inc. (InHealth Mutual)129.210/12/12

Oregon

Health Republic Insurance of Oregon59.52/21/12

Oregon

Oregon's Health CO-OP (Community Care of Oregon)56.63/23/12

South Carolina

Consumer's Choice Health Insurance Company (CCHIC)87.53/27/12

Tennessee

Community Health Alliance Mutual Insurance Company73.38/31/12

Utah

Arches Community Health Care85.47/31/12

Vermont

The Vermont Health CO-OP33.86/22/12

Wisconsin

Common Ground Healthcare Cooperative56.42/21/12

Why some cooperatives haven’t been successful depends largely on who is asked. Critics of the healthcare reform law argue the co-ops are a waste of money and that their struggle proves it. Those in favor of them argue the co-ops were hindered from the start, when they were written into the Affordable Healthcare Act in place of a single, larger co-op run by the federal government.

This month, nonprofit health insurers in South Carolina, Oregon and Colorado also announced they will not offer policies in 2016.

Consumers’ Choice Health Insurance Company in South Carolina said on Oct. 22 that it will voluntarily run-off and not offer health insurance policies next year. Approximately 67,000 policyholders and small businesses will have to shop for new health insurance as a result, according to a statement released by the company.

This graph shows the decrease in the number of co-op styled health insurance providers on the exchanges from last year to this year.

In Oregon, Health Republic Insurance was facing a $20 million deficit in 2016. The announcement came a little more than two weeks after the Centers for Medicare & Medicaid Services said it would be paying only $362 million, or 12.6%, of the originally promised financial support to the co-ops for 2014. Without the full expected financial support, Health Republic Insurance determined itself to be unviable.

Like Arches Health Plan in Utah, the Colorado HealthOP cooperative announced it will not offer policies on the state exchange after the Colorado Insurance Division stripped the nonprofit of its certification for fear of insolvency. The cooperative insisted it could meet regulatory requirements in 2016 and expected to be profitable, but a financial analysis by the division suggested otherwise, according to SNL Financial. Like other co-ops facing millions of dollars in losses, Colorado Health OP was anticipating a larger amount from the federal risk corridor program and without that money, fell below the Colorado Insurance Division capital requirements.

Tennessee’s Community Health Alliance Mutual also announced their sales will cease in 2016.

The string of closures prompted Kelly Crowe, the CEO of the National Alliance of State Health co-ops, to issue a statement that concluded by saying, “This week’s news should not be viewed as start-up failures, but rather closures due to unfulfilled promises. Indeed, under the right conditions, co-ops have proved their models can be successful in providing quality health insurance to Americans who need it most…”

Other recent cooperatives to close include the Kentucky Health Cooperative and the Health Republic Insurance of New York - the co-op that had the largest exchange enrollment of 215,000 members.

Michael Thrasher

Michael is a former research analyst at ValuePenguin covering property and casualty insurance, including homeowners and renters insurance.

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