Another cooperative insurer is boasting about low premiums attracting droves of new exchange members, raising questions about long-term viability in the wake of CoOportunity's liquidation.
Colorado HealthOP was the standout insurer in the Rocky Mountain state's recently-ended exchange open enrollment. Out of 12 insurers selling exchange plans around the state--including Anthem Blue Cross, Cigna, Humana, UnitedHealthcare and Kaiser Permanente--Colorado HealthOP enrolled 50,000 residents, about 35 percent of the total exchange membership, plus another 25,000 off-exchange.
Colorado HealthOP's exchange market share is up from 15,000 members in total in 2014, and it's on a par with the exchange membership of Kaiser Permanente, which has 585,000 total membership in Colorado, about 12 percent of the state's population.
Colorado HealthO, a federally-supported co-op created by the Rocky Mountains Farmers Union Educational and Charitable Foundation, reduced its premiums on silver exchange plans by 10 percent for 2015 compared to 2014. It ended up selling the lowest-price silver plans in nearly all regions across the state.
"Because we are a member-focused and member-governed cooperative, we consistently look for innovative ways to provide high-quality and affordable coverage for our members," said Colorado HealthOP CEO Julia Hutchins, a veteran of nonprofit managed care in California and Colorado. "By listening to our members, we were able to design some unique options that should appeal to Coloradans across the state."
Nationally, Colorado HealthOP joined six other cooperative plans in lowering premiums compared to 2014's rates, including HealthyCT, Meritus of Arizona, Evergreen Health Co-op of Maryland, Land of Lincoln Health in Illinois and Health Republic Insurance of N.J.
Colorado HealthOP was also among 11 cooperatives that were on track to end 2014 with a ratio of losses-to-remaining funds worse than CoOportunity's (53 percent) before it was liquidated, according to S&P.
Colorado HealthOP lost $23 million in 2014, although its medical cost ratio of 88 percent was still well below the threshold for a death spiral and in the range of nonprofit Medicaid and Medicare plans.
Colorado HealthOP leaders also pointed out that at the time of the S&P study incoming federal funding had not yet been received. The company maintains that it is on track to be sustainable in the short and long term.
"We meet the DOI's capital and surplus requirements. We also haven't used all the funding we were awarded in our start-up phase," the company said in a statement. "We're right about where we projected we'd be in terms of membership. Growth is really important for stability. You need a big membership pool to balance out the risk of those with high medical needs. Also, our growth was planned."
The co-op is banking on a mix of new and old insurance designs to keep its members healthy and staying in its plans, including quality- and value-oriented provider contracts and helping members take "ownership of their own health." The co-op's plans have benefits like free generic drugs for cholesterol, diabetes, asthma, hypertension and depression, coverage for acupuncture and chiropractic treatment, and flex plans that come with a $900 debit card for medical expenses.
Colorado HealthOp may also be able to avoid the fate of CoOportunity if it can manage its revenue cycle through the turbulence of changing payment schedules from the federal risk adjustment program. The major contributors to CoOportunity's demise, according to the Iowa insurance commissioner, were "insufficient capitalization," "extremely high healthcare utilization," and an unforeseen six month gap until 2014's risk sharing payments would be received. Another big factor, according to CoOportunity's CEO, was the lives that were not in the exchange market, some 200,000 Iowans in "grandmothered" pre-ACA health plans, most of them underwritten by mutual giant Wellmark Blue Cross and Blue Shield. Colorado insurance regulators are phasing out those non-compliant plans this year.
Nonetheless, anything could happen and state regulators are prepared for it. "We have processes in place for any carrier that goes insolvent so that consumers aren't left holding the bill," the Colorado Division of Insurance told the Denver Post. "If it comes to taking over a company, claims continue to be paid through a nonprofit company called the Colorado Life and Health Insurance Protection Association."
Around the top of the health insurance market, Aetna CEO Mark Bertolini sees the CoOportunity liquidation as "a precedent kind of transaction," although it's still an open field for co-ops to survive or even thrive.
"Not all co-ops will go the way of CoOportunity Health," aid Standard & Poor's credit analyst Deep Banerjee. "Some may have capital or liquidity issues, but most seem to have adequate liquidity at least to survive the near term."