The first Obamacare-created nonprofit insurer announced just before Christmas that it would be taken over by the state of Iowa due to severe financial problems — and the shift will likely cost customers.
CoOportunity Health, a co-op created in 2013 by the Affordable Care Act with almost $150 million in loans, serves between 110,000 and 120,000 customers in Iowa and Nebraska, according to Iowa state insurance commissioner Nick Gerhart. Now it’s in the control of Iowa state regulators, after a solvency loan from the federal government failed to stave off financial ruin. (RELATED: Obamacare-Created Insurer Is Taken Over By The State)
The co-op was hemorrhaging money — its net cash and investments fell from $121.5 million in October, after receiving a solvency loan from the Obama administration, to just $17 million on Dec. 12. But even while it was coming to the realization that it wouldn’t be able to succeed financially, CoOportunity continued selling policies on the two states’ federally-run Obamacare exchanges during the second open enrollment period, which began Nov. 15.
By the time CoOportunity revealed it would be taken over by Iowa, the deadline to purchase or change coverage effective Jan. 1 had passed. Customers who want to change their coverage in light of the takeover — both Iowa insurance commissioner Nick Gerhart and the company itself encourage doing so — won’t be able to in time for next month’s coverage.
The deadline for HealthCare.gov-run states like Iowa and Nebraska to change their coverage was Dec. 15; CoOportunity didn’t announce the state takeover until Dec. 24. Customers who change their insurance plan now won’t be able to start their new policies until Feb. 1 — meaning that a month into the year, they’ll have to start building up their deductibles and out-of-pocket maximums all over again.
That won’t be a problem for everyone, but for those who end up spending on health care in January — such as those with chronic illnesses or who suffer from an emergency — the belated shift could end up forcing them to pay thousands of dollars toward their deductible twice.
The Des Moines Register lays out the depth of the problem for one CoOportunity customer, David Fairchild, who is fighting a chronic form of leukemia. Fairchild is switching to the one other Obamacare exchange insurer in Iowa, Coventry Health Care, but can’t begin the plan until Feb. 1.
In January alone, Fairchild told the Register he will spend about $3,000 out of pocket on medicine to treat his leukemia — but that won’t count toward his deductible on the Coventry plan come Feb. 1. Then Fairchild will have to spend thousands more the next month before his deductible kicks in, likely pushing him over the annual out-of-pocket limits on Obamacare plans.
“It’s just really unfortunate,” Fairchild told the Register. “I’m so disappointed.”
CoOportunity is the first Obamacare-created nonprofit insurer to reach such a dire financial position, but five other co-ops, out of 23 nationwide, have received funding from the Obama administration in order to remain solvent.
The Centers for Medicare and Medicaid Services have given out almost $3 billion in funding to the nonprofits since Obamacare was passed.