A request by the Maine Bureau of Insurance to temporarily take the reins of financially troubled Community Health Options was rejected by the federal government.
The takeover proposed to guide the company through addressing its $74 million deficit.
"We thought, given the number of risks that Community Health Options has on their books and their available capital, we thought it was prudent to try do what we term de-leverage a company to give them more margin," said Maine Insurance Superintendent Eric Cioppa. Cioppa considered taking the health co-op’s receivership in late 2015 to “provide stability” to the nonprofit.
Cioppa stated that the co-op had more members than it could have handled. Since the co-op started offering its plans on the ACA’s online marketplace, its members more than doubled from around 40,000 in 2014 to about 84,000 in 2016. For the past couple of years, however, the co-op set premiums in advance that were not adequate enough to cover its costs.
"And what we had planned to do, if we got court approval, it would have been a random — both Maine and New Hampshire residents — a random selection of those members to move," Cioppa shared.
A written statement from the Centers for Medicare and Medicaid Services (CMS) proposed alternative approaches to the issue that do not involve takeovers. The federal agency does not believe in the bureau’s solution, as it would result in about 20,000 individuals losing coverage.
While Community Health Options was in support of the Bureau of Insurance’s request to take the receivership, CEO Kevin Lewis said that the co-op has been experiencing positive results as of late. Lewis reported that for January, the co-op’s net income was $300,000 dollars more than projected.
"February is coming in in a similar fashion, and that's better than planned," Lewis remarked.