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Iowa insurance division plans to liquidate CoOportunity Health
Jan. 23, 2015 12:57 pm, Updated: Jan. 23, 2015 5:06 pm
DES MOINES — The Iowa Insurance Division on Friday hammered the next-to-final nail into CoOportunity Health's coffin.
Iowa's Insurance Commissioner Nick Gerhart will ask the Polk County District Court for an order of liquidation next week. With no expectation for additional cash inflow until the second half of 2015, the Insurance Division said the medical claims exceed the not-for-profit insurance company's cash on hand.
The Insurance Division expects a hearing to take place in late February and an order to liquidate the company should take effect on Feb. 28.
'Our No. 1 priority is to the Iowans and Nebraskans impacted by this event,' Gerhart said in a statement released Friday. 'We want to ensure a seamless transition as possible to other coverage and avoid any gaps in coverage.'
The health co-op was set up with $146 million in federal funds under the Affordable Care Act and was licensed to do business in 2013.
State regulators took control of CoOportunity at the end of December.
The company had too many members for its reserves and only had about $17.2 million in cash and assets on hand. That, compounded with the fact that it could not obtain additional funds from the Centers for Medicare and Medicaid Services (CMS), forced it into a tough financial spot.
CoOportunity Health had about 120,000 members — far more than original projections — in Iowa and Nebraska when state regulators took over in December. Since it entered into rehabilitation, more than 53,000 have found another insurance carrier — 14,521 in Iowa and 38,838 in Nebraska.
The Insurance Division said that on Feb. 1, CoOportunity will have 68,005 members.
Gerhart is urging those who still have a CoOportunity health plan to change carriers. Open enrollment will end on Feb. 15.
Managing volume
Coventry Health Care, now the only insurer still selling plans eligible for tax credits on the state's marketplace, does not yet have specifics available on the number of people who have moved from CoOportunity to Coventry.
But the company said it is working with 'CMS and the Insurance Commissioners in Iowa and Nebraska to help employers and consumers impacted by the solvency issues at CoOportunity Health.'
Coventry already absorbed 9,700 people in November after CoOportunity announced it would withdraw from the Iowa Health and Wellness Plan, which provides health care coverage to low-income adults.
'We have been able to manage the volume of questions from consumers and we have been successful in enrolling new members and re-enrolling existing members,' said Rohan Hutchings, communications director for Aetna, the parent company of Coventry.
Aetna is the third-largest U.S. health insurer.
Those who do not switch carriers may keep the coverage they have with CoOportunity for 'a short period time' if they continue to pay their premiums, the insurance division said — but for no later than the end of 2015, according to the division's website.
Group policies will be canceled within 30 to 45 days of the liquidation order, the division said.
The Guaranty Associations of Iowa and Nebraska — made up of all licensed health and life insurance companies — would take over claims payments of up to $500,000 per member. And individuals will lose tax credits after the liquidation order is entered.
The 20 or so insurance companies who make up the guaranty associations would be assessed a portion of the claims and liquidation costs, the insurance division said earlier in January. This would be determined by each carrier's share of the market.
Traci McBee, spokeswoman for Wellmark Blue Cross and Blue Shield, Iowa's largest insurer, said because the commissioner's plans to liquidate CoOportunity on Friday, it's too early to know specifics.
'We will work with the Iowa Insurance Guaranty Association on what our eventual liability will be,' she said.
'Uncertainty for Iowans'
The National Alliance of State Health Co-Ops, which represents the two dozen co-ops around the country, said CoOportunity's failure is not an indication that there is something wrong with health co-op program or concept.
But Republicans say the floundering insurance company exemplifies the problems the Affordable Care Act created.
'The state of Iowa is working diligently and assisting Iowans whose health insurance was adversely affected by the failure of CoOportunity Health,' Jimmy Centers, communications director for Gov. Terry Branstad, said in an email to The Gazette. 'Unfortunately, this is yet another example of the federal government's unsustainable health care system and more uncertainty for Iowans.'
Centers added that members on the Iowa Health and Wellness Plan have been well served by Coventry and 'we look forward to that relationship continuing in 2015.'
U.S. Sen. Chuck Grassley said Friday that he is looking into the federal government's management of CoOportunity and other health care co-ops like it around the country.
'I'm working to find out what happened between CoOportunity and the federal government,' Grassley said. 'The taxpayers have $2 billion invested in co-ops around the country. The taxpayers only get their investment back when the co-ops succeed.'
Grassley added he is concerned about how the federal government has managed the co-op program. He sent a letter last week to CMS — the federal agency responsible for implementing health care co-ops — to explain its role in CoOportunity's collapse.
'It's unclear whether the federal government was responsive to CoOportunity when the co-op sounded the alarm on running out of money,' he said. 'If the federal government couldn't be reached, or failed to respond adequately, that's poor management.'