Nevada Health Cooperative will go out of business at the end of the year.

The nonprofit, member-owned health insurer is closing because claim costs have been higher than expected for the second year in a row, and opportunities to attract new investment are limited, Pam Egan, the chief executive officer, said in a statement.

“It has become clear that the amount of growth required to provide quality care at reasonable rates will be unlikely in the next plan year,” Egan said.

Egan wrote to providers — in boldface type — that, ”Claims continue to be processed in the same manner, and we will accept claims for dates of service through Dec. 31,” according to a copy of the provider letter posted on the CO-OP website.

In a letter to brokers, Egan said, “We are committed to satisfying broker commissions that have been and continue to be earned through 2015.”

nevada coop

Nevada Health CO-OP is one of 23 health insurers created with startup loans from the Consumer Operated and Oriented Plan (CO-OP) program, and it’s the third CO-OP to close or announce plans to close.

CoOportunity Health, a CO-OP that operated in Iowa and Nebraska, collapsed in late 2014.

Louisiana Health Cooperative Inc. is on track to shut down Dec. 31 through a voluntary process similar to the Nevada Health CO-OP shutdown process.

Drafters of the Patient Protection and Affordable Care Act (PPACA) created the program in an effort to increase the level of competition in the private health insurance market, and to create carriers that were more interested in helping patients than in earning profits. The U.S. Department of Health and Human Services (HHS) issued billions of dollars in PPACA-authorized CO-OP startup loans, and CO-OP managers get tax breaks.

But CO-OP organizers cannot bring in health insurers as investors, and they cannot sell the plans. In 2011, when would-be CO-OP organizers were studying the program, program watchers said those restrictions might doom the organizers’ efforts to raise money from sources other than HHS.

Nevada Health CO-OP did better at attracting enrollees than many other CO-OPs. It ended up with about 16,500 enrollees at the end of 2014, according to the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG). The company reached 49 percent of its original 2014 enrollment projection in spite of selling coverage through a state-based exchange that suffered from crippling enrollment system problems in 2014.

Although Nevada CO-OP managers came closer than managers at many other CO-OPs at forecasting 2014 enrollment, the CO-OP still reported a net loss of $15 million for 2014 on $52 million in premium income. The company had $57 million in claims expense and $19 million in administrative expense.

See also: 

Nevada CO-OP seeks enrollee info

CO-OP program: Watchdog agency takes a sniff

Health Co-Ops Face Uncertain Future