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December 24, 2014 12:00 AM

Struggling Iowa co-op health plan taken over by state

Bob Herman
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    The Iowa Insurance Division Tuesday took over CoOportunity Health, a not-for-profit, consumer-governed health plan established by the Patient Protection and Affordable Care Act, so the 120,000 people who bought a CoOportunity plan will have to look elsewhere for coverage. The co-op, licensed to sell health plans in both Iowa and Nebraska, will no longer be an exchange option in 2015.

    Nick Gerhart, Iowa's insurance commissioner, asked Polk County District Court Tuesday for a petition of rehabilitation. That means the state will run CoOportunity and try to correct its existing financial problems. But if the insurer cannot be revived, the state will liquidate it.

    In the first 10 months of 2014, CoOportunity lost more than $45.7 million (PDF) as its members had “extremely high healthcare utilization,” the state said. Officials were not immediately available Wednesday for comment.

    High medical costs have not been the insurer's only problem. CoOportunity said it is at risk of losing $60 million under possible changes to the ACA's risk-corridor provision. Under that program, HHS collects money from insurers that have lower-than-expected medical claims and shifts it to insurers with more costly members, making it a revenue-neutral program in theory. However, in the most recent spending bill from Congress, those risk-corridor payments were put at risk.

    So far, CoOportunity has received more than $130.6 million in solvency funds and $15.4 million in operational funds from the CMS, the state said. But last week, the CMS told the insurer it would not provide any more solvency loans. The agency has provided solvency funds over the past few months to several co-ops, including CoOportunity.

    Excluding CoOportunity, there are 22 co-op plans left. They were created under the ACA's Consumer Operated and Oriented Plan Program as a way to create competition on the exchanges. Originally, the law provided for co-ops to exist in every state, but the program's funding was cut during the fiscal cliff debate in 2012.

    Other co-ops have had varying success. Kentucky Health Cooperative and Maine Community Health Options covered 4 in 5 residents using exchanges in those states in the first year of operation.

    Follow Bob Herman on Twitter: @MHbherman

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