An Obamacare-created and taxpayer-funded insurance company in Iowa has been taken over by the state due to a financial crisis.
CoOportunity Health is Iowa’s insurance cooperative — a nonprofit insurance company created by the Affordable Care Act to supposedly undercut the large, for-profit insurers that Democrats castigated as “greedy” and “evil” during the debate over health care reform.
After just beginning to offer plans in 2013, the company’s already insolvent and has now been taken over by the state of Iowa, insurance commissioner Nick Gerhart announced Wednesday. CoOpportunity doesn’t have enough cash on hand to be sure it can pay claims for its 120,000 customers, if necessary. The company has only $17 million in cash and assets, Gerhart said.
The federal government’s Obamacare administrator the Center for Medicare and Medicaid Services initially gave CoOportunity a $112 million loan award in Feb. 2012, but doled out an additional $32.7 million emergency award to keep the company solvent in September of this year.
That wasn’t enough to keep it in business. CoOpportunity’s management expected to receive more federal money than they did, putting them in continuing financial peril.
The nonprofit insurers were single-payer advocates’ answer to private insurance companies, which some argued hiked premiums just to pad their profits. But after its initial year of Obamacare, CoOportunity was struggling so much that it ended up having to up its premiums in Iowa by 19 percent on average. (RELATED: Iowa Obamacare Premiums Rise By Double-Digits)
“It’s a difficult situation,” Gerhart said. Customers’ coverage will continue for now, but Gerhart expects that most customers will switch to other insurers operating on Iowa’s and Nebraska’s Obamacare exchanges by the end of the open enrollment period on Feb. 15. It’s no longer accepting new sign-ups for coverage.
The state of Iowa, in the form of Gerhart himself, is in charge of the company now, according to Dana McNeill, a CoOpportunity vice president.
The Obamacare-created company has been bleeding cash over the past several months. Its net cash and investments fell from $121.5 million on Oct. 31, just a month after receiving a solvency loan from the Obama administration, to $17 million on Dec. 12, the Des Moines Register reports.
It’s far from the only Obamacare-created company that’s in peril. The Obama administration handed out almost $3 billion in loans to get the co-ops started in 2013. They were included in the law to placate critics on the left who advocated a public insurance option and lost.
In Sept. 2014, the administration handed out another round of solvency loans to a number of co-ops who needed help staying in business. Six state co-ops received a total of almost $268 million in extra loans to help keep the companies solvent and in business.
Even since then, the administration issued two last-minute solvency loans, which it kept quiet for weeks. Kentucky Health Cooperative received an extra $65 million emergency solvency loan days before the second open enrollment period launched and the co-ops began to sign up new customers — but CMS did not announce the loans until Dec. 15, along with another last-minute $23 million solvency loan to Wisconsin’s Common Ground Healthcare Cooperative. (RELATED: Feds Awarded Secret Last-Minute Loan To Struggling Obamacare-Created Insurer)
Meanwhile, large, private insurance companies are doing better than ever under Obamacare’s mandate to hold health insurance and its generous subsidies to purchase exchange coverage.