Consumer operated and oriented plans known as CO-OPs have given some commercial carriers a run for their money in parts of the HIX marketplace where there was little or no competition, but these entities, created under the Affordable Care Act, also have run into some of the same systemic obstacles that have dogged for-profit plans for years.
Case in point: CoOportunity Health deciding to pull out of Iowa’s Marketplace Choice Plan, which has been described as an integral part of the Hawkeye State’s unique stamp on Medicaid expansion. To continue would have been a money losing proposition to cover 9,700 Iowans, who have since been switched to public coverage under the Iowa Health and Wellness Plan.
CoOportunity Health and Aetna-owned Coventry Health Care were the only carriers offering coverage this year in the Marketplace Choice Plan for state residents whose annual income is between 101% and 138% of the federal poverty level. Iowa’s the Health and Wellness Plan serves about 86,000 Iowa adults whose earnings fall below 100% of the FPL.
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Staying in the program would have “resulted in a significant financial drain for a start-up company whose only funds were those provided by the federal government under loans and premiums paid by all of our other members,” explains CoOportunity Health CEO and president Cliff Gold.
With regard to that latter source of funding, he didn’t want the CO-OP’s 85,000 private-pay customers subsidizing that government-created block of business with projected loss ratios of more than 150%. Even Coventry turned down an opportunity to absorb CoOportunity’s block of business because of the high loss ratios and poor risk profile of that population, he says.
The chief sticking point was a significant use of medical services by health plan members whose previous source of coverage, a limited public program called IowaCare that covered poor adults, expired last year. Many of those individuals have chronic illnesses. While their care was expected to cost more, Gold says the situation proved to be more problematic than anticipated.
Iowa Gov. Terry Branstad, a Republican, initially resisted a traditional federal expansion of his state’s Medicaid program under the ACA like some of his GOP peers in other states. In the end, he agreed to modifications that included federally paid private insurance policies, according to The Des Moines Register.
The CO-OPs decision isn’t expected to compromise care for state residents. “The program already has mechanisms in place that allow for Iowans to continue to be served under Iowa’s Medicaid expansion waiver program,” says Angel Robinson, a consumer advocate with the Iowa Insurance Division. Indeed, Gold says “the government already paid all of their premiums, co-pays and deductibles so they were not hurt in any way.”
Gold surmises that some relief may be sought from the state legislature in terms of carrier requirements or forcing residents to be part of a private, rather than public, program. “We don’t preclude our interests in getting back in that business in 2016, or beyond, if the state were interested,” he reports, “but I think they would have to make some changes for it to be viable.”
The development, while not particularly significant beyond Iowa’s borders, points to an ever-changing health care landscape as states pursue traditional or alternative routes to Medicaid expansion.
“Some plans pull out of markets, some plans go under, some plans are able to get high rates and some plans do just fine,” observes Matt Salo, executive director of the National Association of Medicaid Directors. He adds that some plans also “are able to take advantage of the opportunity to innovate with respect to providing top quality care to people with chronic conditions, and thrive and grow.”
CoOportunity Health is one of 23 CO-OPs operating in 25 states. More than 400,000 people enrolled in CO-OP plans last year, according to Jan VanRiper, Ph.D., executive director and CEO of the National Alliance of State Health CO-OPs.
Bruce Shutan is a Los Angeles-based freelance writer.
