The Demise of a Health Insurer in 1 Year!



Although the following chain of events directly affects some 120,000 health insurance policyholders residing in the states of Nebraska and Iowa, it could be a bell weather for individuals residing in one of the other 23 states that have/offer health insurance through a federal government approved/funded, non-profit, member owned health insurer. (see for the states currently offering health insurance through a government funded/approved COOP).
March 23, 2010 – The Patient Protection and Affordable Care Act (PPACA) is signed into law by the President.  Section 1322 of PPACA includes a provision allowing for the establishment of “consumer operated and oriented plans”, or COOPs.
January, 2012 – CoOportunity Health is founded as a non-profit, 501c(3) entity in Iowa, led by former Wellmark/Blue Cross Blue Shield executives.
February, 2012 – The Centers for Medicare and Medicaid Services (CMS) approves CoOportunity Health, along with 22 other COOPs in 23 states around the country.  CoOportunity Health receives initial, low interest loans from the U.S. government totaling $112.6 million.  (Note: the loan included a 15 year payback, and an initial interest rate under 0.4% on the solvency portion, and a 5 year payback time frame on the initial start up portion.) This initial amount was divided/used as follows: $14.7 million for initial operations; $98 million as operating capital, meeting insurance department solvency and surplus to premium requirements. (Note: according to the Omaha World Herald; Money & Jobs; December 28, 2014 article, the initial operating capital allocation was $15.4 million and $130.6 million in solvency funds, respectively.)
October, 2013 – CoOportunity Health is officially open for business in the states of Iowa and Nebraska, and begins enrolling members, both on and off the federal health insurance exchange, individual and employer group coverage.
January 1, 2014 – The earliest allowable effective dates of issued coverage.
Q2, Q3, 2014 – CoOportunity Health realizes significant growth, reaching 5,000 covered members by Q2, 89,000 members in Q3, and 120,000 members by early Q4.
November 1, 2014 – 2015 open enrollment begins (concludes 2/15/15)
December 13, 2014 – The $1.1 trillion Budget Reconciliation Act (or CRomnibus Bill) is passed by Congress.  One of the provisions of the bill eliminates anticipated funding for the 24 COOPs, including CoOp Health.  As a result, $60 million of CoOp Health’s anticipated, additional $125.6 million of government funding was eliminated, placing them at risk. (Note: the Iowa Department of Insurance allowed CoOp Health to include the $125.6 million on its balance sheet as an asset.)
December 23, 2014 – The Iowa Insurance Commissioner submits a petition for an “order of rehabilitation”, ceasing any new business activity from that point forward.  Within an issued statement, the commissioner says – “…people who signed up for the first time with CoOportunity Health after December 15, 2014 will not have coverage and should find other insurers”. 
January 7, 2015 – The Iowa Department of Insurance issues guidance strongly encouraging agents and brokers to “explore other coverage options for individuals and groups”.  The guidance also outlines the possibility of CoOp Health’s status changing to “liquidation”.  In such an event, insured groups would be terminated 45 days after a liquidation order is issued.  Affected terminated members would have the option of filing claims through the state guarantee fund, which has a $500,000 per member limit on medical and pharmacy claims.
January 23, 2015 – The Iowa Department of Insurance announces its intent to file a petition with the court for liquidation.  The insurance commissioner indicates that “there is no expectation for additional cash inflow until the second half of 2015 and medical claims currently exceed cash on hand”.  It is anticipated that a hearing will take place in February (2015), and the order to liquidate CoOportunity Health will commence on February 28, 2015.