While 11 co-ops are technically still operating, four co-ops in Oregon, Ohio, Connecticut and Illinois will soon shut down due to lack of funds. State regulators in Oregon and Connecticut gave orders to close the states’ co-ops last week.
Last year, the more than 20 running co-ops served nearly 1 million Americans, with experts expecting that figure to fall to 35,000 covered Americans in 2017. Lawmakers created the ACA’s co-ops to provide Americans a different option to commercial payers, thereby facilitating competition in the marketplace. However, many co-ops were forced to close, whether that is due to insufficient enrollment or escalating healthcare costs.
The ACA’s risk-corridor program fell short, and co-ops suffered steep losses when they did not receive funds to offset losses. Various co-ops sued the federal government for failing to pay the money the co-ops claimed they were owed. Last year, payers requested the government pay them $2.87 billion for participation in the risk-corridor program. In October 2015, the government said it would pay less than 13 cents on the dollar of the amount payers requested. In June, Evergreen Health Cooperative, a Maryland co-op, filed a lawsuit against the federal government to avoid more than $22 million in fees.
The remaining co-ops are employing various strategies so their fate deviates from their fallen counterparts. Some are diversifying so they can serve larger employers while others are increasing premiums.
Maine’s co-op contracted with Express Script with the goal of saving $14 million each year by reducing drug prices. While the co-op plans to save money, Maine Community Health Options CEO Kevin Lewis said they co-op will not accrue the savings until 2017.
New Mexico’s co-op plans to obtain money from investors, as well as plans to add larger employers and labor groups. Montana Health Co-Op is striving to rein in administrative costs after suffering $40 million losses last year.
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