Community Health Options, a not-for-profit co-op insurance company based in Maine that also sells health plans in New Hampshire, will limit individual enrollments later this month because of “higher-than-expected claims costs.”
It's an inauspicious sign for the company, which was one of the few successful co-ops created by the Affordable Care Act. Twelve of the ACA's 23 co-ops have folded or are in the process of closing down, all of which occurred this year.
Community Health Options is one of three insurers selling individual plans in Maine and one of five insurers in New Hampshire. Both states use the federal HealthCare.gov website for enrollment. The co-op will stop directly enrolling people in individual coverage on Dec. 15, and people who are signing up for its plans through HealthCare.gov will only have until Dec. 26, the co-op said on its website Wednesday.
The decision to halt enrollment early will not affect current members, and Community Health Options still plans on pursuing small employers into next year. “We aim to resume individual enrollment as soon as possible, but in the meantime continue to focus on group business,” CEO Kevin Lewis said in an e-mail Wednesday.
Community Health Options, which has 76,000 members, was one of the only ACA co-ops that didn't lose money out of the gate. Several of the failed co-ops—written into the ACA as an alternative to the so-called public option—lost millions of dollars due to costly claims. Many older and sicker members chose the co-ops during the first two open enrollments due to their low premiums, but they also used a lot of healthcare services, which crushed the co-ops and their limited financial reserves.
And like UnitedHealth Group, Highmark and other insurers, Community Health Options saw much higher claims costs this year, Lewis said. The co-op lost $17.3 million in the third quarter after staying in the black the first part of the year.
The ACA's risk corridors program was supposed to reimburse health insurers for early losses, but due to congressional restraints, the CMS was only allowed to pay out 13% of requested risk corridors payments. Many co-ops cited the lack of payments and “political” nature of the ACA as reasons for their demise.
But Community Health Options did not assume the ACA's risk programs into its actuarial predictions when it got off the ground. In 2014, the co-op actually had to pay into the risk corridors program.
“We didn't price with the ACA risk corridors or risk adjustment in mind,” Lewis told Modern Healthcare earlier this year. “We priced according to what we thought was a sufficient amount of premium to cover claims and our administrative load.”
For 2016, Community Health Options altered its premiums in both states. Small-group rates in Maine actually declined by as much as 11%. The highest individual rate increase in Maine was 3.7%. But individual premiums in New Hampshire rose anywhere from 13.8% to 16.7%, according to rate filing data.
Lewis added that there is “no closure on the horizon. This is entirely precautionary in light of the higher claims costs within the individual market.”
