Something big happened in Iowa on Christmas eve. While most Iowans were distracted by last minute Christmas shopping, baking, and wrapping the presents, Nick Gerhart was busy worrying about the future of an Iowa health insurance company. Mr. Gerhart is the Commissioner of the Iowa Insurance Division, which just determined that CoOportunity Health is in a hazardous financial condition. On December 24, 2014, the state of Iowa took over operations of CoOportunity health, with the Commissioner appointed as rehabilitator.
What is a Rehabilitator?
The company will continue in existence, but the Commissioner, as rehabilitator, is granted authority to manage the company. The Commissioner will:
- Assume management of the company.
- Attempt to correct existing problems.
- Continue operations.
- Maintain policyholder accounting.
- Develop a plan of rehabilitation or petition the court for liquidation.
What or who is coOportunity Health?
CoOportunity health sprung from the Affordable Care Act (ACA) also known as ObamaCare. It was one of two companies listed on the Iowa healthcare exchange that offered coverage for Iowans who qualify for the federal subsidies under the law. It was one of 23 new customer-owned cooperatives approved by the federal government under the ACA to offer health insurance. With the failure of the non-profit co-op, Coventry Healthcare is now the only option for Iowans who qualify for federal subsidies.
Who is affected?
CoOportunity Health provides insurance coverage for about 120,000 individuals from Iowa and Nebraska. Those who signed up before December 15th, 2014 AND continue to make their premium payments will continue to have insurance, unless the company is liquidated (we’ll discuss that more below). Those who signed up on or after December 16th, 2014 will not have coverage with CoOportunity Health and must enroll in a different insurance plan by the end of open enrollment, February 15th, 2015. Under state law, if you paid a premium but learned that you will not be covered, you are entitled to a refund of the premium that was paid. Contact www.Healthcare.gov at 1-800-318-2596, TTY 1-855-889-4325 to discuss a refund of premium. The call center is open 24 hours a day, 7 days a week. CoOportunity is no longer offered on the marketplace.
Policy holders are advised to watch for important information from CoOportunity health, healthcare.gov, and the Iowa Insurance Division. Commissioner Gerhart also says that tax subsidy eligibility and amounts may change if you keep you CoOportunity Health plan. He also advises that “Most policyholders may find it in their best interests to find other coverage before the end of open enrollment, which ends February 15, 2015.” For the time being, those insured by CoOpertunity should continue to pay their monthly premiums, and automatic withdrawals will continue as scheduled. Claims will be submitted to CoOportunity as usual, and there should be no impact for healthcare providers standing with CoOportunity. Customers wishing to change insurance companies should contact Healthcare.gov at 1-800-318-2596.
The Nuclear Option
Commissioner Gerhart says that if CoOportunity Health is not able to be rehabilitated and an order of liquidation is entered, your coverage may be limited. “State statutes create a safety net to protect policyholders when an insurer goes out of business. Those statutes cap coverage at $500,000 per life. Most policyholders may find it in their best interests to find other coverage before the end of open enrollment.”
The Des Moines Register reports that there are several reasons behind the monetary troubles of CoOportunity Health. Signs of a problem started to show in October with the company pulled out of the Marketplace Choice Plans. The company reportedly lost money on about 10,000 poor Iowans covered by the plan. The next problem surfaced when the company announced a 19% rate increase, compared to 9% increase by its competitors. Jesse Patton, an independent insurance agent in West Des Moines, told the Register that it appears CoOportunity made its benefits too generous. By doing that, he said, “what they ended up doing was attracting a lot of sick people.” Court documents show that the company received about $145 million from the Centers for Medicare and Medicaid services (CMS). A loss of almost $46 million was reported during the period of January 1st, 2014 to October 31st, 2014. At that point, the company reported about $74 million in assets. Adverse claims continued, and on December 12th, CoOportunity’s assets were down to only $17 million. The company is owed money by the federal government (CMS) though, in the sum of about $125 million; but a provision in the Appropriations act of 2015 passed on December 13th put about half of that money in jeopardy. CoOportunity says it stands to lose about $60 million due to this provision.