Iowa's health insurance co-op failing

Tony Leys didn’t bring glad tidings today to the 120,000 members of CoOportunity Health in Iowa and Nebraska. In a front-page story for the Des Moines Register, Leys reported that state regulators have taken over the non-profit health insurance co-op, one of only two companies selling policies on Iowa’s exchange. It sounds like the co-op will be liquidated in the coming months.  

Former Iowa Insurance Commissioner David Lyons and former Wellmark Blue Cross/Blue Shield senior executive Cliff Gold created CoOportunity Health to sell policies to individuals, families, and small businesses on the Iowa and Nebraska state health exchanges. Although the co-op signed up more members than anticipated for 2014, it also found that costs exceeded projections. Leys reported,

CoOportunity was one of just two Iowa carriers offering individual health insurance statewide on the public online marketplace, healthcare.gov, which was created under the Affordable Care Act. Wellmark has declined to participate. The only other Iowa carrier selling policies on the public marketplace is Coventry Health Care, which is owned by Aetna. […]

Signs of possible trouble for CoOportunity surfaced in October, when the co-op pulled out of a state program that uses federal Medicaid money to pay private insurance premiums for relatively poor Iowans. Gold said at the time that the company lost money on the 9,700 Iowans it had covered under that program, called the Marketplace Choice Plan. Coventry is the only carrier still participating in the program.

Many consumers who went on healthcare.gov this fall saw that CoOportunity’s premiums for 2015 were significantly higher than Coventry’s. CoOportunity raised its premiums for such policies by an average of 19 percent for 2015, compared to a 9 percent increase from Coventry.

Gold, the CEO, cited several issues for the large rate increase. One was his complaint that the state and federal governments decided to let Wellmark customers keep their old policies through 2016. He noted that such customers had been able to pass Wellmark’s reviews of their health status. Such reviews for pre-existing conditions no longer are allowed. The fact that most of those healthy Iowans remained with Wellmark left CoOportunity with a relatively unhealthy pool of people to cover, Gold said.

Wellmark, which controls more than three-quarters of Iowa’s individual and small-group health insurance markets, countered that it was only looking out for its customers when it allowed them to extend their old policies.

Leys quotes health law Professor Timothy Jost as saying it’s understandable some new health insurance carriers would have financial trouble, since “they were just shooting in the dark” when they set premiums for the first year. He also quotes an independent insurance agent as saying CoOportunity attracted “a lot of sick people” by making benefits too generous.

I would argue that in effect, state regulators allowed Wellmark to continue cherry-picking relatively healthy Iowans by allowing the near-monopoly provider to delay compliance with Affordable Care Act requirements on benefits. I am disappointed the co-op is failing, as my family are CoOportunity members, and our policy was more affordable than what we had been paying Wellmark. I hope we will find something comparable with Coventry.

Any relevant comments are welcome in this thread.

P.S.- Critics will claim CoOportunity’s failure was a failure of “big government,” but when the Affordable Care Act was being drafted, former Senator Max Baucus and other conservadems came up with the health insurance cooperative concept as an alternative to creating a public option (such as a Medicare buy-in).

P.P.S. – Watch Governor Terry Branstad continue to hail the Iowa Health and Wellness Plan as a success of his administration, despite mounting evidence that Iowa would have been better off simply expanding Medicaid, as foreseen under the federal health care reform law.

  • Some in the GOP will consider CoOportunity failure as a success.

    Republicans ran against Obamacare in the midterms, even in legislative races. Branstad was stubbornly against Medicaid expansion. This seems to have been orchestrated by Branstad administration regulators in collusion with Wellmark.

    I would argue that in effect, state regulators allowed Wellmark to continue cherry-picking relatively healthy Iowans by allowing the near-monopoly provider to delay compliance with Affordable Care Act requirements on benefits.

    • I don't know about orchestrated

      Wellmark clearly wanted to avoid covering the sicker, uninsured population. For the first time in 10-plus years, Wellmark announced in fall 2013 that they would not raise premiums for current policy-holders, in an obvious attempt to discourage them from shopping for a better deal on the exchange. I think Wellmark executives didn’t need any help from Branstad on this and would have done the same regardless of who was governor.

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