Just days before open enrollment, the Consumer Operated and Oriented Plan (CO-OP) in Utah, Arches Health Plan, became the tenth CO-OP to shut down. CO-OPs are nonprofit health insurers that were established by the Affordable Care Act (ACA) to serve as additional affordable health insurance options for consumers. The CO-OPs received low-interest loans to get off the ground and had been operating in 23 states. However, many of the CO-OPs now are struggling to maintain their financial stability, which has resulted in the ten closures, as of October 29.
The financial challenges stemmed from the fact that the CO-OPs were signing up sicker customers than anticipated, and this was compounded by CMS’s decision to only pay out 12.6% of what was requested this year in risk corridor payments. The risk corridor program was designed to alleviate some of the uncertainty around setting premiums for the new and unfamiliar market under the ACA by providing payments to insurers that faced high losses, and many of the CO-OPs were looking to these payments to stay solvent in their early years. State regulators in Colorado, Kentucky, Louisiana, Nevada, New York, Oregon, South Carolina, Tennessee, and Utah are now working with the companies to close down the troubled CO-OPs and help transition enrollees to other plans. Another CO-OP that operated in Iowa and Nebraska was shut down by regulators last year.
So what does this mean for consumers? Roughly 450,000 consumers in the nine states with closing CO-OPs (including around 200,000 in New York) will need to find new coverage during this year’s open enrollment period, beginning November 1. Although the enrollment period extends through January 31, consumers should decide on a new plan before December 15 so that their plan is in place on January 1 when their current CO-OP coverage ends.
Most consumers will have a range of alternative health plan options available through Healthcare.gov or their state’s health insurance marketplace. They can begin shopping for new plans, in addition to calculating what type of financial assistance they may be eligible for, on November 1. Plans in the individual market need to include the same essential benefits, so even as individuals’ CO-OP coverage ends, they will be able to find plans that covers the same services. However, as consumers browse through their new plan options, it will be important for them to consider whether their current doctors and prescription drugs will be covered by their plan of choice.
The closing of CO-OPs does not mean the end of the ACA program: 13 still remain in business. For those consumers affected by the closures, quality plan options continue to be available within their states.
