Obamacare co-ops drop from 23 to ‘three little miracles’ final, including Montana
(KHN) New Mexico Health Connections’ decision to close at the end of the year will only leave three of the 23 nonprofit health insurance co-ops that emerged from the Affordable Care Act.
One co-op serves customers in Maine, another in Wisconsin and the third operates in Idaho and Montana and will move to Wyoming next year. All of them made money in 2019 after surviving several difficult years, according to data filed with the National Association of Insurance Commissioners.
They are also all set to receive tens of millions of dollars from the federal government under an April Supreme Court ruling that said the government inappropriately withheld billions from insurers meant to help amortize losses from 2014 to 2016, the first three years of ACA markets. . While these payments were meant to help insurers lose money, they were vitally important to co-ops because they had the least financial backing.
Hailed as a way to boost competition among insurers and keep prices going on Obamacare exchanges, the co-ops had more than one million people registered in 26 states at their peak in 2015. Today, they cover around 128,000. people, or just 1% of the 11 million Obamacare registrants who receive coverage through exchanges.
The nonprofits were a last minute addition to the 2010 health law to satisfy Democratic lawmakers who had failed to secure a public option health plan – a plan put in place and managed by the government – in the markets. Congress provided $ 2 billion in start-up loans. But almost all of the co-ops struggled to compete with the established carriers, who already had more money and recognized brands.
State insurance officials and health experts hope the last three cooperatives will survive.
“These are the three little miracles,” said Sabrina Corlette, research professor and co-director of the Center on Health Insurance Reforms at Georgetown University in Washington, DC.
Maine helped Supreme Court win
Maine’s cooperative, Community Health Options, has helped bring competition to the state’s market, which has at times struggled to attract insurance companies, said Eric Cioppa, who heads the insurance office of the state. ‘State.
“The plan added a level of stability and was positive for Maine,” he said.
The cooperative has around 28,000 members – up from around 75,000 in 2015 – and is building up its financial reserves, Cioppa said. Community Health Options is one of three insurers present in the Obamacare market in Maine, the minimum number according to experts is necessary to ensure dynamic competition.
Kevin Lewis, CEO of the plan, attributed its survival to several factors, including a first profit in 2014, when the ACA marketplaces opened, which secured the plan before several years of losses. He also admitted to bringing most of the health plan functions in-house rather than outsourcing, diversifying to sell plans to small and large employers, and securing lower rates from both health systems over a difficult few years.
Jay Gould, 60, a member who offers the plan to workers at his small grocery store in Clinton, is happy with the plan. “They have great customer service, and it’s good to know when I talk to someone that they’re from Maine,” he said.
The Central Aroostook Association, a Presque Isle nonprofit that helps children with developmental disabilities, switched to the co-op last year to save 20% on its health premiums, administrator Tammi Easler said. Having an insurer in Maine means any issues can be dealt with quickly, she said. “They are readily available and I never have to wait an hour on hold.”
The co-op, which has made a profit of $ 25 million each over the past two years, has offered to lower its average premiums by about 14% in 2021, Lewis said.
Community Health was one of the main plaintiffs in the Supreme Court case and expects to receive $ 59 million in arrears from the settlement.
The federal decision to suspend these so-called risk corridor payments – designed to help health plans recoup some of their losses – was one of the factors that caused many co-ops to fail, Corlette said. . Republican critics of the ACA, however, blame the Obama administration’s mismanagement of plans and lack of oversight.
Insurers are in talks with the Trump administration on whether the $ 13 billion owed to carriers should be added to their 2020 balance sheets or could be counted against operations from previous years. This year, insurers are generally raking in large profits as many people have delayed elective care due to the COVID-19 pandemic. Since the ACA limits insurers’ profit margins, adding that the federal windfall to this year’s ledger could mean that many insurers would have to pay their consumers most of the money. If the money is applied to previous years, insurers could probably keep more to add to their reserves.
Too much competition in New Mexico
The Supreme Court ruling came too late for New Mexico Health Connections, which lost nearly $ 60 million from 2015 to 2017. The co-op reportedly received $ 43 million in overdue payments, but in an attempt to raise the necessary liquidity, she sold that debt. to another insurer in 2017 for a much smaller amount.
Marlene Baca, CEO of the co-op, which made a profit of $ 439,000 in 2019, said her goal of bringing competition to the market has been met, as five more companies will recruit customers this fall for 2021. Yet , this competition ultimately led to the plan’s decision to end operations, announced last month.
With only 14,000 members, it made no sense to continue operating due to the high fixed administrative costs, she said. His plan was also undermined by the slump in the economy this year, which pushed many state residents out of work and made more than 3,000 members eligible for Medicaid, the federal health program. State for the poor.
“We have done our best,” Baca said, noting that his business is shutting down with enough money to pay for its outstanding health claims. Many other co-ops that have closed have been shut down by their states and unable to meet all of their debts to health care providers, she said.
The Montana cooperative is growing
The Mountain Health Co-Op, which has approximately 32,000 members, has just two competitors in its home state of Montana and four in Idaho.
An important factor in its survival is that the plan received a $ 15 million loan in 2016 from the St. Luke Health System, Idaho’s largest hospital provider, CEO Richard Miltenberger said. Although he was not working for the cooperative at the time, Miltenberger said, he understands the hospital wanted to help keep competition in this market.
The cooperative expects $ 57 million from the victory of the Supreme Court.
“We are in excellent shape,” said Miltenberger. The plan, which paid off St. Luke’s loan and made a profit of $ 15 million in 2019, added benefits for vision this year and offers dental exam benefit for next year. It also provides most of the insulin and medications for asthma and chronic obstructive pulmonary disease to members without any copayments to help ensure compliance.
The insurer is moving to Wyoming for 2021, which will end the Blue Cross plan’s monopoly in that state’s Obamacare market, he said.
Wisconsin Mystery Donor
Wisconsin’s Common Ground healthcare co-op was on the verge of going out of business in 2016 when it received a $ 30 million loan, CEO Cathy Mahaffey said. The insurer refused to identify the benefactor other than to say that it was not a person or a company doing business with the plan.
In 2018, Common Ground was the only health plan in seven counties in northeastern Wisconsin, she said. Today, the cooperative has approximately 54,000 members and faces competition from two to five carriers in the 20 counties where it operates.
Common Ground, which posted a profit of $ 73 million last year, expects to receive around $ 95 million from the Supreme Court victory.
Wisconsin’s decision not to expand Medicaid under the health law has benefited the co-op because people with incomes between 100% and 138% of the federal poverty line ($ 12,760 to $ 17,609 for an individual) are not eligible for Medicaid and must stay with market plans for coverage. In states that have extended Medicaid, anyone with an income below 138% of the poverty line is eligible.
Another factor was its decision in 2016 to eliminate the supply of large network of providers and sell a plan offering only a narrow network of doctors and hospitals, allowing it to benefit from lower rates of its providers. suppliers, according to Mahaffey.