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ACA Risk-Adjustment Program Chokes Remaining ACA CO-OPs

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Ongoing problems with the Affordable Care Act risk-adjustment program have pushed two of the last remaining Consumer Oriented and Operated Program carriers into receivership.

The Maryland Insurance Administration has put Evergreen Health Inc. into receivership and, apparently, given up on the idea that investors might buy its assets. That CO-OP carrier has about 25,000 enrollees.

The Massachusetts Division of Insurance has put Minuteman Health, a CO-OP that does business in Massachusetts and New Hampshire, into receivership, but left open the possibility that Tom Policelli, the company’s chief executive officer, might find a way to re-organize the company outside the restrictions of the CO-OP system.

(Related: New England Health CO-OP Hopes to Convert to Insurance Company Chart)

Minuteman Health has about 37,000 enrollees.

Regulators have not published any details about the Evergreen Health or Minuteman Health receiverships on the web.

Regulators say both plans will continue to pay medical claims.


The drafters of the Affordable Care Act created the CO-OP program in an effort to increase the level of competition in the private health insurance market, by providing startup loans for nonprofit, member-owned carriers.

The moderate Senate Democrats who championed the program left the Senate soon after the ACA came to life.

Senate Republicans cut funding for the CO-OP program, and they faced little opposition when they did so from the administration of former President Barack Obama.

Obama’s health insurance regulators used the ACA as the basis for setting tight restrictions on CO-OP funding and operations. A CO-OP, for example, could not be owned, or partly owned, by any existing health insurer, and its member owners could never sell the CO-OP. The sale restriction made using a CO-OP’s assets as loan collateral impossible.

About three-quarters of the 23 CO-OPs that came to life in 2014 and 2015 are now dead, or under some kind of state supervision.

The ACA Risk-Adjustment Program

ACA drafters and regulators also created a risk-adjustment program, to help shift cash from issuers of individual and small-group coverage that ended up with low-risk enrollees to issuers that ended up with high-risk enrollees.

Managers of the CO-OPs that survived in 2017 and other relatively small, new plans have argued  that the risk-adjustment program rules discriminate against smaller, newer, cheaper plans, by rewarding plans with higher premiums and more information about their enrollees.

The risk-adjustment bills for 2016 came out in June.

Massachusetts regulators and Maryland regulators say they put their CO-OPs into receivership partly because the risk-adjustment program managers sent the CO-OPs big risk-adjustment bills for 2016.

— Read Maryland CO-OP Withdraws From 2017 Individual Health Market on ThinkAdvisor. 


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