CoOportunity Health snagged by shifting insurance landscape

When Iowa's insurance commissioner announced last week it would take control of the management of the not-for-profit insurance company CoOportunity Health due to financial challenges, it was another step in a series of events that created a perfect storm for the company and its customers.

The company only had about $17.2 million in cash and assets on hand, and could not obtain additional funds from the Centers for Medicare and Medicaid Services (CMS), according to the Insurance Division.

But Affordable Care Act (ACA) experts said a constantly changing insurance landscape led the company to the financial position in which it found itself.

First of all, it had far more customers than it originally projected it would carry, explained Pete Damiano, director of the University of Iowa's Public Policy Center.

The company had more than 120,000 members in Iowa and Nebraska in December. And it already had exceeded its 2016 enrollment projections by February of this year.

Damiano believes that part of this fast growth was due to Iowa's predominate insurance carrier — Wellmark Blue Cross and Blue Shield — opting not to participate in the marketplace. This gave Iowans in need of federal subsidies to afford health insurance fewer choices and CoOportunity Health more customers.

'The co-op wound up with way more people (than originally projected) because the other players were not there,' Damiano said.

It also gave CoOportunity more claims.

Another blow came when the state announced in April that it would allow an extension of policies that were not ACA-compliant, Damiano said.

The ACA requires a package of minimum benefits, covering issues such as mental health and maternity benefits. It also forbids insurers to figure out a person's health status and determine whether to offer coverage and at what price.

CoOportunity at first argued this would create two unequal marketplaces and raise prices in both, adding it could put pressure on compliant plans.

Damiano said these new compliant plans were more likely to attract people who were sicker and needed more insurance.

'People keep saying young people need to sign up for insurance for this to succeed,' he said. 'Really, healthy people need to sign up.'

Signs of potential trouble first arose in October, when CoOportunity announced it would withdraw from the Iowa Health and Wellness Plan — which provides health care coverage to low-income adults.

The Iowa Department of Human Services shifted the 9,700 people affected to Coventry Health.

CoOportunity said it withdrew from the Iowa Health and Wellness plan because 'the high utilization of health care services in (the Iowa Marketplace Choice Plan), most notably by the previous IowaCare population, has resulted in financial losses to the co-op.'

Then on Dec. 16, the CMS told the co-op it would receive no further funding.

'The game was really moved out from under them,' Damiano said.

The Future

Those who enrolled in a CoOportunity insurance plan on or before Dec. 15 will continue to receive health coverage. However, those who signed up for a plan on Dec. 16 or later will no longer have coverage with CoOpportunity and must enroll in another plan by the end of open enrollment on Feb. 15, 2015, the Insurance Division said in a news release.

In a frequently-asked-questions column on its website, it stated all CoOportunity policyholders might find it in their best interests to sign up for other coverage before the end of open enrollment.

The U.S. Department of Health and Human Services announced Tuesday that 18,913 Iowans purchased plans through the Health Insurance Marketplace leading up to the Dec. 15 deadline for coverage beginning Jan. 1, 2015. It is unclear, however, how many of them chose CoOportunity plans.

Karen Wielert, an ACA navigator for Planned Parenthood of the Heartland, said she's received a few phone calls already from individuals looking to switch their plans.

'I'm really getting more questions as to what is happening,' she said. ''What does it mean, do I still have a policy, can I switch, how quickly before I get new coverage?''

Wielert said those who switch plans by Jan. 15 will have coverage starting Feb. 1 and those who switch coverage by Feb. 15 will have coverage by March 1.

'There are still options,' she said. 'They just have to go through them and see what works for them.'

But Coventry Health is the only private option remaining on the marketplace, the UI's Damiano noted.

Iowa is in the minority among states, he said, because for the most part, the number of plans and insurance carriers on the marketplace increased between 2014 and 2015's open enrollment period.

'Iowa is going the other way, though,' he said, adding that spectators will have to wait to see if the company can 'take on these people.'

'The future is very uncertain,' he said. 'But that is why the insurance commissioner took over, so these people aren't left in the cold.'

Aetna, parent company of Coventry Health, said it will work with CMS as well as the insurance commissioners in Iowa and Nebraska to aid in a solution regarding CoOportunity's solvency issues.

'That solution must be in the best interests of the people in both states and incorporate adequate pricing to ensure sustainability of coverage,' the company said. 'Aetna has taken a long-term, disciplined approach to the exchange, which has resulted in competitive and sustainable products and services for the people we serve in Iowa and Nebraska.'

Also uncertain are Wellmark's intentions. The company has put off participating in the federal marketplace for its first two years, citing challenges with the exchange.

It also was hesitant to speculate how many new customers it was likely to see.

'It is too early to tell at this point,' the company said in a statement. 'Wellmark and its authorized agents are here for anyone who has questions about the health insurance options available to them.'

In the beginning

Co-ops, or consumer operated and oriented health, plans were created in 2010 under the Patient Protection and Affordable Care Act. They were a compromise to a public health insurance option, explained Pete Damiano, director of the University of Iowa's Public Policy Center.

These new insurance options were designed to add more competition at the state level and help drive down costs of insurance plans.

The co-ops were meant to be nationwide, and the law originally put aside $6 billion for the federal government to provide in loans to emerging co-ops. But that number was reduced to $3.4 billion in 2011, and was cut again to $2 billion in 2013 during federal talks relating to sequestration.

These cuts lead to the creation of only 23 co-ops across the country.

CoOportunity Health received about $146 million in federal funding, according to documents filed with the Polk County District Court.

'The news about CoOportunity Health is not a statement on the health insurance co-op program or the co-op concept,' said the National Alliance of State Health Co-ops in a statement. 'It's a reflection on the fact that all insurers — not just co-ops — are operating in unique markets with unique business plans and varying state regulations. The circumstances for CoOpportunity Health in Iowa are not the same as those in the 23 other states in which co-ops are currently operating.'

Martin Hickey, chairman NASHCO's board of directors, said both Cliff Gold and David Lyons, CoOportunity Health's leadership team, were experienced and thoughtful people who were 'hammered by the circumstances.'