Health Insurance Startup Collapses In Iowa (Obamacare death spiral)
Kaiser Health News ^ | January 14, 2015 | By Clay Masters, Iowa Public Radio
Posted on 1/14/2015 11:00:13 AM by Oldeconomybuyer
... CoOportunity Health has failed. The Affordable Care Act set aside funding for health care co-ops, to enable the organizations to compete in places where there aren’t many insurers. CoOportunity Health was the second largest co-op in the country in terms of membership, and one of the largest in terms of the federal funding it received.
But then CoOportunity hit a kind of perfect storm, says Peter Damiano, director of the University of Iowa’s public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.
“CoOportunity Health’s pool of people was larger than expected, was sicker than expected,” Damiano says. “So their risk became much greater than the funds that were available.”
On top of that, when the Obama administration in late 2013 allowed people to keep the insurance plan they already had, many customers happy with Wellmark stayed put. Damiano says this meant many of the customers who flocked to CoOportunity tended to be people with expensive health problems who’d had trouble paying for insurance before.
Not only were the patients sicker, but CoOportunity’s leaders initially thought they would enroll about 12,000 people in Iowa and Nebraska. They got about ten times that, according to Nick Gerhart, Iowa’s insurance commissioner.
Also, Gerhart says, the co-op thought it was going to get more federal money.
“On December 16 around 4 o’clock we were informed they weren’t going to get any further funding,” he says. “Nothing was pulled — it just wasn’t extended further.”
Gerhart is now essentially the CEO of the co-op because the state has taken it over. He likens the situation to a small business suddenly having its credit shut off by the bank.
(Excerpt) Read more at kaiserhealthnews.org ...
