CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low. After taking control of the co-op in late December, Mr. Gerhart decided last month that it could not be saved and asked a court to liquidate it. The co-op, he said at the time, faced more than $150 million in liabilities. That left its customers scrambling for new coverage, and providers wondering if millions of dollars in outstanding claims would ever get paid.
More broadly, it raised the question of whether one of the Affordable Care Act’s biggest experiments in holding down insurance costs was in trouble beyond Iowa and Nebraska. The co-ops, which the law says must be “consumer governed” by boards elected by their customers, have received nearly $2 billion in federal loans, including $145 million that went to CoOportunity. They were initially supposed to receive $6 billion over time, but Congress later slashed the amount and virtually no funds remain….
A recent analysis by the A. M. Best Company, an insurance rating agency, found that all but one of the co-ops reported financial losses through the third quarter of last year. Some analysts say that it is too early to predict the long-term viability of the co-ops, and that first-year losses were expected. But for now, the losses indicate that many were paying more in insurance claims and other expenses than they were receiving in premiums, a problem that seems to have hurt CoOportunity more than the others.