A startup insurance company loaned $145 million by the U.S. government under Obamacare is running out of money and being taken over by state officials in Iowa.
The company, CoOportunity Health, which also serves Nebraska, was placed under Iowa Insurance Commissioner Nick Gerhart’s supervision this week and is no longer accepting new enrollees, according to a statement from his office. While Gerhart’s agency will operate the company for the time being, it’s urging policyholders to seek a new insurer.
CoOportunity Health is a co-op, or Consumer Operated and Oriented Plan, one of 23 nonprofit health insurers providing coverage in 26 states. They were created under the Patient Protection and Affordable Care Act to increase competition. The fate of CoOportunity provides new fodder for Obamacare opponents who argue that the law wastes government money.
The co-op’s troubles are a blow to an Obamacare program that had outperformed the direst predictions of Republicans. While Obamacare opponents had argued the companies would fail and squander government loans, some co-ops including CoOpportunity had outpaced forecasts for enrollment, growing five times faster than expected through March.
CoOportunity now has 96,350 enrollees, up from 63,000 at the end of March, according to its website. The Centers for Medicare and Medicaid Services provided the insurer $130.6 million in funding for solvency and $15.4 million for operations, according to a legal filing by Gerhart. CMS told CoOportunity Dec. 16 it couldn’t provide more funds. The insurer lost $45.7 million from January to October, according to the petition.
“CoOportunity is not insolvent on a statutory basis at this time, but CoOportunity’s lack of additional solvency funding places it in a financially hazardous condition,” the petition said.
CMS, the Iowa Insurance Division and CoOportunity didn’t immediately respond to phone and e-mail messages seeking comment.
Representative Darrell Issa, the California Republican who heads the U.S. House oversight committee, predicted last year that five co-ops that received $2 billion in loans under Obamacare wouldn’t survive because of financial or regulatory shortcomings. CoOpportunity didn’t make his list, though a co-op in Vermont did, and it never got off the ground after CMS pulled its funds.
People who enrolled in CoOportunity on or before Dec. 15 will still have insurance, and anyone who enrolled after will need to choose a new plan by the end of open enrollment Feb. 15, according to Iowa’s Insurance Division.
“Most policyholders may find it in their best interests to find other coverage before the end of open enrollment,” the Insurance Division said on its website.