They enrolled nearly 800,000 Americans in health insurance coverage since 2012, but their failures have been swift and sweeping. A full 13 of the nonprofit cooperatives spawned by the Affordable Care Act have now shut their doors, leaving hundreds of employees out of work and insurance agents working to help find new coverage for their myriad policyholders.
Several stakeholders have offered reasons for the co-ops’ failure – Republicans opposed to the ACA say the program was ill-conceived and bound to fail, while those supportive of the law have argued the program was underfunded and that the failures are not unlike those of many small businesses that close their doors within five years of opening.
The National Association of Insurance Commissioners has not made any definitive statements, but point to a number of potential triggers: the fact that the companies were new, a lack of consumer knowledge about co-op offerings, and a very competitive marketplace in most regions.
Now, the chief executive of one of these shuttered co-ops is offering a new reason for their dismal performances.
Shaun Greene, who founded and helmed Utah co-op Arches Health Plan, told state lawmakers that the Center for Consumer Information and Insurance Oversight (CCIIO) doomed the co-ops by pledging millions through the ACA’s “risk corridor” program and then reducing the sum with little notice.
Specifically, Greene said the CCIIO promised Arches $11 million in 2014 and more than $16 million this year, then decreased the sum to a fraction of those amounts only to never pay any of the risk corridor money.
“They changed the rules, and didn’t do what they said they were going to do,” Greene said.
He went on to cite “incompetence, laziness, duplicity, business inexperience, massive bureaucracy and politics” as reason for the change.
The funding promised by the CCIIO was indeed limited after Congress passed legislation cutting back on support for the group, which was originally slated to be $6 billion.
Greene is hardly the first co-op executive to lay blame to the cuts. Earlier this year, Kelly Crowe – who led Kentucky’s co-op – said the group decided to fold after requesting $77 million from the risk corridor program only to be told it would receive just $9.7 million from the agency.
“Today’s new regarding the wind down of Kentucky Health Cooperative is a direct result of lower-than-promised risk corridor payments that were announced last week,” Crowe said at the time.
On its website, the agency says it plans to “work closely with state regulators, consumers and other stakeholders to ensure the Affordable Care Act best serves the American people.”
