One of the only two carriers offering ACA insurance in Iowa could soon collapse. The Affordable Care Act created CoOportunity Health alongside twenty-three other health care cooperatives. The company began to sell insurance in Iowa and Nebraska in 2013, and acquired around 120,000 members in those two states. Experts thought the co-op would succeed because they trusted its leadership, but it is now nearing financial collapse as the federal government has cut off some funds the company was getting. The payouts covered by the plans have started to exceed the cash the company has to pay them, and regulators have taken over the company. More, via the Des Moines Register (h/t Jake Meador):
In the court papers, state officials also said federal administrators declined to provide more “solvency funding” to the company. When asked about that Wednesday, [program spokesman Aaron] Albright said federal officials “had to prioritize” co-ops’ requests for assistance, because their requests totaled more than the available money […][Insurance Commissioner Nick] Gerhart said existing customers’ coverage will continue, but he expects most CoOportunity members to switch to other carriers. For individual policyholders, that move must be made by Feb. 15, the national deadline for enrolling in coverage for 2015. […]
One of the theories behind the ACA was that competition among insurers on the state exchanges would help bring down costs, but in Iowa, at least, there is now likely to be no competition at all, as Coventry Health Care will be the only insurer left on the exchange if CoOportunity falls completely. Coventry is owned by Aetna, one of the biggest insurers nationally, a Fortune 100 company with an active lobbying presence on Capital Hill. The other company poised to win from from CoOportunity’s collapse is Iowa’s biggest insurer, Wellmark Blue Cross and Blue Shield, which decided not to sell plans on the exchange. That means its plans are not eligible for the federal subsidies provided by the ACA, but Wellmark was nevertheless quick to remind its customers that, “This is unfortunate news and timing for CoOportunity Health policyholders. Wellmark and its authorized agents are here for anyone who has questions about the health insurance options available to them.”In other words, an ACA initiative has failed in Iowa and Nebraska, and its failure will cause huge disruptions and uncertainties in the lives of many state residents currently covered by CoOportunity. Not only that, but it could mean premium hikes all around. Some claim CoOportunity’s high posted premiums for 2015 sprung from the high concentration of especially sick residents in its risk pools. But if all those customers migrate to Coventry or Wellpoint, they will bring their risks with them, driving up costs for customers of those insurers. And a total CoOportunity collapse would solidify the monopolies large insurers possess in those states, cutting across the very cost control force the ACA hoped to harness.