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October 15, 2015 at 10:15 AM
Another nonprofit, member-owned health carrier says it will close its doors at the end of the year.
Managers of Community Health Alliance Mutual Insurance Company, a Tennessee carrier founded with $73 million in loans from the federal Consumer Operated and Oriented Plans (CO-OP) program, have received state permission to put the company in a runoff process.
The insurer will continue to pay claims filed by holders of in-force policies, but it will stop taking on new customers, and it will shut down after Dec. 31, managers say. Community Health’s contracts with providers “should remain in force during the runoff,” and the insurer will pay providers for claims incurred through Dec. 31, managers say.
Community Health now has about 27,000 enrollees, up from 2,287 when compared to the end of 2014. It reported a $22 million net loss for 2014 on $6.6 million in premium revenue.
See also: Surviving PPACA CO-OPs may have 475,000 enrollees and Watchdog: CMS is giving 4 CO-OPs’ finances extra attention
Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the CO-OP program in an effort to increase the level of competition in the health insurance market. The CO-OP provision and U.S. Department of Health and Human Services (HHS) regulations put tight restrictions on CO-OPs. Under current rules, for example, the member owners of a CO-OP can never sell the CO-OP. That restriction has hurt CO-OP’s ability to get cash from conventional investors.
