Another ACA-funded co-op is going under, dissolving rather than confront an "unhealthy future." Many of the others are also struggling to stay in the black.
Louisiana Health Cooperative, one of the 23 consumer-operated and -oriented plans created after the Affordable Care Act, is voluntarily closing down effective January 2016. The company won't be selling new plans or renewing any, but will continue covering all current members and their claims.
"We are honored that you have entrusted us with your health insurance coverage," wrote LHC board chair William Oliver, a former AT&T executive, in a letter to the health plan's 16,000 customers. "Rest assured that we currently have the capital allocated to fulfill all obligations to member s through the end of the year."
Louisiana Health Cooperative received a $65 million federal loan to start up as an alternative to traditional insurers. It ended up being one of six insurers selling ACA policies in Louisiana, a state with longstanding problems of uninsurance and chronic disease and with a large, dominant insurer, nonprofit mutual Blue Cross and Blue Shield of Louisiana, which enrolled 125,000 residents in ACA exchange plans.
It seems LHC has run into some of the same problems as CoOportunity Health, a co-op in Iowa and Nebraska that was ordered into liquidation by state regulators after a cascade of utilization and high claims. The difference is that LHC is deciding to wind down sooner rather than later, before entering another enrollment period, in a bid to avoid chaos.
"LAHC has sustained itself over the last few years, but is not growing enough to maintain a healthy future," said Greg Cromer, LAHC's CEO, a former Lockheed Martin executive. "By proactively and voluntarily addressing our situation now, LAHC will be in a position to maintain all of its policies in force through the end of the year, and to cover all outstanding claims and operating expenses. We are committed to all of those impacted by this decision, and we have capital allocated to fulfill all financial obligations through and following the end of the year, including staffing, provider funds and our other obligations."
An audit by the Health and Human Services inspector general recently found that 13 of the 23 original cooperative plans did not meet their 2014 enrollment projections, and that all but one, Maine Community Health Options, are spending more money than they're bringing in.
"The low enrollments and net losses might limit the ability of some co-ops to repay startup and solvency loans, and to remain viable and sustainable," the report warned.