State of Iowa takes over CoOportunity Health

Financial problems have lead the state's insurance commissioner to take control of the management of the not-for-profit insurance provider CoOportunity Health.

CoOportunity Health, a health co-op, was set up through federal funding under the Affordable Care Act and was licensed to do business in 2013. The two dozen co-ops created nationwide were designed to add competition into the marketplace with the hopes of bringing down prices.

It is one of two providers to offer plans on the state's marketplace through healthcare.gov.

But the not-for-profit insurance company, which offers coverage to about 120,000 members in Iowa and Nebraska, has insufficient capital, the Insurance Division said. It only has 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).

This lead Insurance Commissioner Nick Gerhart to submit a petition for an Order of Rehabilitation on Tuesday, which the Polk County District Court approved. This means that the company will continue in existence but be managed by Gerhart.

Those who enrolled in a CoOportunity Health 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 CoOportunity Health and must enroll in another plan by the end of open enrollment on Feb. 15, 2015.

CoOportunity Health did not oppose this order in recognition of the financial concerns of the Insurance Division.

According to the Iowa Insurance Division, Gerhart will attempt to correct existing problems, continue operations, maintain policyholder accounting, and develop a plan of rehabilitation or petition the court for liquidation.

The insurance company has received about $146 million in federal funding, according to documents filed with the Polk County District Court. CoOportunity Health said that a recent act by Congress 'placed in jeopardy” the assets of one of the mechanisms used to spread out possible financial risk, which the company estimates reduced its assets by about $60 million.

CMS told CoOportunity Health it would not receive further funding on Dec. 16, which lead Gerhart to put the company under a supervision order, saying it was in a 'hazardous financial condition,” according to court documents.

An Oct. 31 financial statement filed by the company with the Insurance Division indicated a net loss of about $45 million during the period of Jan. 1 to Oct. 31, according to court documents.

Signs of trouble first appeared in October when the Department of Human Services announced that CoOportunity Health would withdraw from the Iowa Health and Wellness Plan - which provides health care coverage to low-income adults - affecting about 9,700 people.

CoOportunity Health said in October that '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.”

The Insurance Division said in a frequently asked questions column on its website that policyholders may find it in their best interests to find other coverage before the end of open enrollment.

Dana McNeill, vice president of corporate communications, said CoOportunity Health is cooperating fully with state and federal regulators and will do everything it can to ensure a smooth transition for its policyholders.

'There are still a lot of details to be worked through,” she said, adding more information will come out next week after the holidays.