Now 12 CO-OPs Won’t Be Back; Will HHS Help the Others Survive?

On Nov. 4, three days after the open-enrollment period began, the Michigan Dept. of Insurance and Financial Services announced Consumers Mutual Insurance, the state’s Consumer Operated and Oriented Plan (CO-OP), would run off its business and not sell coverage on or off the state’s exchange. The prior week, two other CO-OPs — Arizona’s Meritus Mutual Health Partners and Utah’s Arches Health Plan — announced they wouldn’t sell coverage for 2016. So far, 12 of 23 CO-OPs have failed.

Meritus, and a few other CO-OPs, had expected they’d be able to turn a profit in 2016, despite the low reimbursement through the risk-corridors program (HEX 10/15, p. 1). Christopher Condeluci, a principal at CC Law & Policy in Washington, suspects there might have been some political motivation behind pushing to close the CO-OPs this fall rather than being forced to shutter them during an election year. In regions that already have few competitors, the loss of the CO-OPs could cause rates to increase, he wrote in his weekly Policy & Regulatory Update.

Condeluci noted that HHS Sec. Burwell recently indicated her agency and the White House are “exploring options” to help the remaining CO-OPs succeed. “I believe HHS has the authority to do this through the regulatory process. But what about the 11 CO-OPs that closed?” he asked. “They are going to scream bloody murder if HHS — after the fact — finally decides to help the CO-OPs.”

In a Nov. 2 letter to Acting CMS Administrator Andrew Slavitt, Sens. Orrin Hatch (R-Utah) and Lamar Alexander (R-Tenn.) are pressing the administration to explain why so many CO-OPs have failed and how federal loan money — which tops $1.1 billion —will be recouped. The House Energy & Commerce Committee’s subcommittee on Oversight and Investigations on Nov. 5 held a hearing to examine the failed CO-OPs. The 12 failed CO-OPs have cost taxpayers more than $1 billion in federal loans, according to the subcommittee.

The following is a list of CO-OPs that have ceased operations in 2015. Their MCO IDs — the unique identifier issued to each insurer in AIS databases — are in parentheses. These insurers will continue to appear in AIS databases for years in which their operations were active.

• Consumers Mutual Insurance of Michigan (#1735)
• CoOportunity Health (#1737)
• Kentucky Health Cooperative, Inc. (#1738)
• Health Republic Insurance of Oregon (#1743)
• Arches Health Plan (#1744)
• Colorado HealthOp (#1747)
• Louisiana Health Cooperative (#1749)
• Consumers' Choice Health Plan (#1750)
• Meritus Health Partners (#1764)
• Nevada Health CO-OP (#1783)
• Community Health Alliance (#1788)
• Health Republic Insurance of New York (#1804)

Excerpted from the 11/1/15 issue of AIS’s Inside Health Insurance Exchanges.

© 2015 by Atlantic Information Services, Inc.