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Life Health > Health Insurance

Regulators to liquidate Iowa PPACA plan

By Allison Bell

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Nick Gerhart, the Iowa insurance commissioner, says he is asking a state court for permission to liquidate CoOportunity Health, a struggling Consumer Operated and Oriented Plan (CO-OP).

The commissioner “has determined that the rehabilitation of CoOportunity Health is not possible,” officials said in a statement. 

Medical claims currently exceed the amount of cash on hand, and “there is no expectation for additional cash inflow until the second half of 2015,” officials said.

Gerhart put CoOportunity under supervision in late December. In early January, the Iowa Division of Insurance posted guidelines discussing what might happen to enrollees who had to depend on state guaranty fund protection.

Gerhart will file a petition for liquidation this week, and a hearing will occur in late February, officials said.

“An order to liquidate the company should take effect on Feb. 28,” officials said.

The Patient Protection and Affordable Care Act (PPACA) provided startup loan funding for nonprofit, member-owned CO-OPs in an effort to increase the level of competition in the commercial health insurance market. CoOportunity was successful at selling qualified health plan (QHP) coverage through the Iowa and Nebraska PPACA public exchanges, and many of its 96,000 enrollees qualify for PPACA premium tax credits.

CoOportunity will no longer be a QHP after March 1, and it will no longer be able to offer access to the PPACA tax credits or cost-sharing reduction subsidies, officials said.

To keep access to PPACA tax breaks, CoOportunity enrollees need to get new QHP coverage by March 1, officials said.

The ordinary PPACA open enrollment period began Nov. 15 and is set to end Feb. 15.

After an exchange plan issuer liquidates, a group plan using its coverage has 30 to 45 days to get new coverage, officials said.

Representatives for CoOportunity’s original management team could not immediately be reached for comment.

Gerhart provided an early look at CoOportunity’s problems in October 2014, when he reviewed a rate filing for a 14.3 percent increase in 2015 rates and said year-to-date experience filed in September justified pushing the increase up to 19 percent. 

“The carrier demonstrated that the claims experience is considerably higher than was projected in the initial rates filed in 2013,” Gerhart said at the time.

PPACA established three risk-management programs — a reinsurance program, a risk-adjustment program and a risk corridors program — to protect major medical insurers from unexpectedly high claims, but carriers are still not sure how much money they will get from the programs or how the programs will work.

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