The Utah Insurance Department is putting the plan in receivership and intends to supervise the runoff of the Arches policies that are now in force, department officials say.
Todd Kiser, the Utah commissioner, said he will look for ways to work with other insurers to fill the coverage void left by Archers’ demise in rural areas of the state.
Drafters of the Patient Protection and Affordable Care Act (PPACA) created the Consumer Operated and Oriented Plans (CO-OP) program in an effort to increase the level of competition in the private health insurance market, and to ease the concerns of lawmakers who wanted all residents of each state to have access to a government-run health plan.
Arches organizers used $85 million in CO-OP loan guarantees to start the company. Organizers did a better job than organizers of many other CO-OPs at managing growth. They said they hoped to attract 20,524 enrollees by the end of 2014, and they succeeded at attracting 22,397 enrollees, or about 9 percent more than they had predicted, according to a report from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (HHS OIG).
The carrier reported a $20 million net loss for 2014 on $53 million in premium revenue. The carrier averaged $2,400 in premium revenue and $2,700 in claims per 2014 enrollee.
The company was hoping to reduce the net loss to $6.3 million this year.
Arches and Utah have posted press releases, website messages and answers to frequently asked questions that closely resemble similar materials posted by the other CO-OPs that have recently announced plans to shut down at the end of the year.
“Arches has been honored to provide a new kind of health care to Utahns — and we thank you for being part of this journey,” the company says in a statement on its home page. “Unfortunately, today we were asked by the state Department of Insurance to wind down our business due to a shortfall in the federal government’s ‘risk corridor’ program, and other factors beyond our control.”
The PPACA risk corridors program is supposed to use cash from exchange plan issuers that did well in 2014 to help issuers that did poorly that year.
Officials at the Centers for Medicare & Medicaid Services (CMS) recently told carriers and state regulators that CMS may collect only enough cash from thriving issuers to pay about 13 percent of the $2.9 billion owed to issuers that did poorly.
The House Ways and Means health subcommittee has scheduled a Nov. 3 hearing on the CO-OP’s problems. The subcommittee has invited members of the public to submit written comments.