South Carolina Health Cooperative — a member-owned, nonprofit health carrier — has collapsed, forcing 500 small businesses to find other health coverage.
Businesses in South Carolina organized the carrier as a self-funded multiple employer welfare arrangement (MEWA). The MEWA operated outside the Consumer Operated and Oriented Plan framework created by the Patient Protection and Affordable Care Act (PPACA).
The MEWA was licensed in 2012. It was providing coverage for about 4,600 people when it shut down, and it had no guaranty fund protection.
Raymond Farmer, the South Carolina insurance director, has asked a state court for permission to put the MEWA in rehabilitation.
The South Carolina Department of Insurance raised concerns about the MEWA in October. The department was waiting for the MEWA to find an insurer to take over its business, but the department decided to put the company into rehabilitation after it found that two of the letters of credit providing security for the MEWA’s reserves were fraudulent, officials say.