Lone profitable ACA insurance co-op losing millions

AP News
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Posted: Dec 10, 2015 4:41 PM

The lone health insurance cooperative to make money last year on the Affordable Care Act's public insurance exchanges is now losing millions and cutting off individual enrollment for 2016.

Maine's Community Health Options lost more than $17 million in the first nine months of this year, after making $10.9 million in the same period last year. A spokesman said higher-than-expected medical costs have hurt the cooperative.

The announcement casts further doubt on the future of insurance cooperatives, small nonprofit insurers that were created during the ACA's creation to inject competition in insurance markets. These co-ops immediately struggled to build their businesses. A dozen of the 23 created have already folded.

An Associated Press review of financial statements from 10 of the 11 surviving co-ops shows that they lost, on average, more than $21 million in the first nine months of the year. Those losses range from $3.9 million reported by Maryland's Evergreen Health Cooperative to $50.7 million booked by Land of Lincoln Mutual Health Insurance Company in Illinois.

"Clearly the remaining health care co-ops are in dire circumstances," said Robert Laszewski, a health care consultant and former insurance executive who has been a frequent critic of the Affordable Care Act. "I don't know how any of them can survive another year."

The cooperatives, like other health insurers, have been hit by soaring medical and prescription drug costs. Plus they've had to spend money building a network of care providers, negotiating rates with them and then marketing their plans to customers.

"It is probably impossible for a startup in the health insurance space to make any significant money in the first couple years," said Standard & Poor's analyst Deep Banerjee.

Established players also have struggled to sell coverage on the ACA's state-based health insurance exchanges, which are a key element behind the law's push to cover millions of uninsured people. UnitedHealth Group Inc. recently reported deep losses from its exchange business and said it would decide next year whether to even remain in the exchanges in 2017.

But other insurers like the Blue Cross-Blue Shield carrier Anthem Inc. and Medicaid coverage provider Molina Healthcare both have said they are making money off their exchange business.