There is a co-op problem in Iowa. The Iowa co-op has been taken over by state regulators that are concerned about its ability to fulfill all of its obligations going forward. This is a big deal for PPACA in Iowa as the co-op had significant marketshare. USA Today has the details:
Insurance Commissioner Nick Gerhart said Wednesday morning that CoOportunity Health has about 120,000 members in Iowa and Nebraska, and only has about $17 million in cash and assets. Gerhart said the company had expected more federal money but didn’t receive it. “It’s a difficult situation,” he said….
The insurance division said the company is no longer taking applications, and anyone who signed up with it after Dec. 16 will need to switch carriers. In a question-and-answer column posted on its website, the division says the company “is in a hazardous financial condition.” The column raises the possibility that CoOportunity might go out of business. If so, it warns customers, “your coverage may be limited. State statutes create a safety net to protect policyholders when insurers go out of business. Those statutes cap coverage at $500,000 per life.”
I’ve never been enamored by co-ops, as I don’t think the tax and ownership structure of a health insurer is all to determinant on outcomes, but I think they have been an interesting experiment and they have been serving a significant role of keeping incumbent players honest on their pricing. The Iowa co-op, Coopertunity Health enrolled a large but fairly sick Iowa population. I don’t know exactly why this is the case, but I’ve speculated in the past about the growth of the co-ops enrollment as a group that this could have made sense:
Some co-ops might have made either a modeling decision that they will attract a very healthy and cheap population. Other co-ops may have decided that the first few years of risk corridor payments can subsidize a membership uberalles mentality, so they are buying a membership base by pricing significantly below costs. Other co-ops may legitimately have several business reasons as to why they are significantly cheaper than major insurers.
What could those reasons be…. The co-ops are still mission driven organizations that are not heavily gold-plated…. I’m betting the compensation structures at the co-ops are both lower and much narrower than compensation structures at major carriers.
The lack of hookers and blow could plausibly explain away a few percentage points of the cost differential. I don’t think it is a major plausible driver of pricing changes.
I think the major driver is the co-ops are new, narrowly focused and don’t have pre-exisiting relationships that they need to continue to cultivate….My gut feel is some co-ops are underpricing either through modeling or strategic intent
A local paper does some nice reporting on a probable cause of the demise of the Co-op, and that is the Crominbus:
The petition said its largest asset was $125.6 million expected from the federal Centers for Medicare and Medicaid Services or CMS. But, the petition noted, those funds, part of the law’s mechanism to spread risk, wouldn’t be received until the second half of 2015. It also said CoOportunity believed nearly half of that money was put in jeopardy because of the omnibus spending bill that Congress passed in mid-December.
A sixty million dollar hole in the budget spread over 160,000 covered lives is a $375 per member cost. That is an ass-kicker if that revenue does not materialize to pay for the care of sicker than average people.
I don’t know if CoOportunity deliberately engaged in a membership uber alles strategy that counted on the risk transfer mechanisms of reinsurance, risk-corridors and risk adjustment to mitigate short term losses as it built itself to a self-sustaining size, or if that was happenstance. But it looks like this co-op is the first victim of the Cromnibus.
I’m surprised there isn’t a headline on Newsmax cheering this already.
The Fat Kate Middleton
And all because Branstad had to prove to the Koch Brothers that he was a good little minion – while not totally alienating the Iowa Senate majority. It could have been so good, but noooo. God, how I detest him. And I get to endure him for what, 16 years? Twenty?
@The Fat Kate Middleton: Branstad is blameless in this case. Blame the teabaggers on capital hill
The Fat Kate Middleton
Forgot to add: watch Governor B and his fellow Republicans now blame Obama for this mess.
The Fat Kate Middleton
Yeah, I know you’re probably right, Richard – but what if he and the lege had just gone with a straightforward state exchange instead of the coop version? They acted like such a move would have given them cooties. Not that I really know anything about the nuts and bolts of health insurance or the ACA, but what was wrong, really, with just taking the route other, more enlightened, states were?
@The Fat Kate Middleton: The co-op insurance company would be on either Healthcare.gov or Iowa Health State Super Duper Exchange.
The Exchange is where the insurance is being sold. The Co-Op is a seller of insurance products. Two very different things. It might matter that Iowa is on healthcare.gov if the Supremes decide to gut Chevron this summer, but at this point, the nature of the exchange is not relevant to what is going on with the Co-op.
The Fat Kate Middleton
Got it. Thanks, Richard. One less reason to hate on Terry, I guess, and that’s good, considering what he does to my blood pressure.
J R in WV
Is it mean to feel good about DC republicans screwing corn belt conservatives? ’cause that’s what’s happening, isn’t it?
I do feel bad for the folks who may have their insurance disappear, and the Co-op folks who may have their jobs go away, but isn’t it really their own fault for voting for crazed republicans?
I really think corporate media truckling to republican masters will be the end of this country being a good place for everybody to live. Soon they will force the vast majority of the population into poverty, and keep them there, with no way to work their way to prosperity. Such an evil goal, and yet it looks like that’s their clear intention.
How I hate their greed!
Yeah, it may fall because of the Cromnibus to rational minds, but to the TeaBaggers it’s going to fail because Obamacare iz soshulism!
thanks for informing us about this.
did you see my question to you about the problems with New Jersey Medicaid? it seems to be a mess
@rikyrah: No I had not. Send them to me via e-mail on the contact page of the blog, and I’ll do some digging.
Here’s the article:
N. J. Medicaid fiasco: Thousands stranded without coverage, no fix in sight
By Kathleen O’Brien | NJ Advance Media for NJ.com
on December 23, 2014 at 7:15 AM, updated December 23, 2014 at 10:16 AM
The doctor was perfectly clear after examining Aurora Blackwell’s son this fall: The boy needed to get to an emergency room for his worsening digestive problems.
Instead, Blackwell took the 4-year-old home and treated him herself — first with prune juice, then suppositories.
Why would the devoted young mother of two ignore her pediatrician’s advice? Because the Burlington County woman knew that despite 10 months of phone calls, emails and letters, her family still lacked health insurance.
“I feel helpless,” she’d written two months earlier in a plea to Gov. Chris Christie. “How much longer do we have to wait?”
The meltdown of the federal government’s website tied to the Affordable Care Act has been well documented. But in New Jersey, something far worse was happening as the state expanded Medicaid access under Obamacare, an NJ Advance Media investigation has found.
In New Jersey, where so many are surrounded by privilege, an estimated 11,000 people are still trapped in a tangle of digital red tape and a bureaucratic maze. These families are unable to enroll in the state’s Medicaid program, leaving them in limbo for months and, in some cases, almost a year. And unlike the federal government, which has solved many of its website problems, New Jersey has yet to announce any permanent solution.
The stunning computer failure at the center of New Jersey’s crisis already has forced the exit of one vendor, left countless boxes stuffed with confidential enrollment data piled in the corridors of county offices and forced workers to rekey data into county computers that cannot interface directly with the state’s 1980s-era main system.
“We’ve gone back to the Stone Age,” said Ellen Vidal, president of the Communications Workers of America unit that staffs the Ocean County Board of Social Services. Her county’s Medicaid backlog over the summer hovered at 4,000.
@rikyrah: This just looks like a standard issue government IT fuck-up