Another gravestone has been added to the Affordable Care Act's co-op cemetery. Arches Health Plan in Utah will shut down by the end of 2015, the state said late Tuesday.
Arches is the 10th not-for-profit co-op insurance plan to shut down this year, and like others that have gone dark in the recent spate of closures, Arches blamed low payments from the ACA's risk-corridors program. The health plan updated its website Tuesday to notify members they will have to select a new carrier on the exchange when open enrollment starts Nov. 1 if they want to retain health coverage.
“It is regrettable that the co-op model has not worked across the country,” Utah Insurance Commissioner Todd Kiser said in a news release. “We are proactively working with other insurers and the federal government to fill the vacancy left by Arches, particularly in the rural areas of the state.”
This month, the CMS said it would pay only 13% of so-called risk-corridor payments, creating a huge shortfall for insurers that had banked on those payments to offset high claims costs from sick enrollees. The feds admitted that “solvency and liquidity challenges” could affect smaller companies. Since that announcement, six co-ops have said they will close by year-end.
Arches had more than 45,000 members in the first quarter of this year, according to insurance filings. With the co-op gone, Utah consumers may face even higher premiums. The CMS said yesterday that the benchmark silver plan on the exchange will go up in Utah by 15.8% on average, but that did not factor in the closure of Arches.