Oregon’s Health CO-OP will shut down at the end of this month after the company dramatically overestimated the amount of financial support it would receive from a federal program.
The departure of another health insurer leaves two carriers selling 2017 individual market policies, those who buy for themselves or their families, in Deschutes County: PacificSource Health Plans and Health Net Health Plan of Oregon.
As of March 31, 620 people in Deschutes, Crook and Jefferson counties were enrolled in Oregon’s Health CO-OP policies, roughly 70 percent of whom had individual policies. The company’s roughly 20,600 policyholders statewide will need to enroll in new policies by July 31 to secure new coverage by Aug. 1.
The Oregon Department of Consumer and Business Services, which regulates insurance, is taking action to shutter the carrier after the Centers for Medicare and Medicaid Services announced last week the CO-OP owes about $900,000 to the federal risk adjustment program, which pays health insurers that take on a disproportionate number of sick enrollees under the Affordable Care Act. The CO-OP expected to receive about $5 million from the program.
“The issue was the company badly misestimated the amount it would receive from the program,” DCBS Director Patrick Allen said.
The Affordable Care Act incentivized the creation of nonprofit, consumer-operated health insurers like Oregon’s Health CO-OP, but they’ve in recent years been shuttering across the country due to poor financial performance. Health Republic, Oregon’s other co-op, shut down at the end of 2016 after its CEO said it would receive about $7 million less than expected from another federal program that provides financial support to carriers following the Affordable Care Act. That one, the risk corridors program, either provided payments or charged carriers money depending on their financial losses or gains.
Like other insurers, the CO-OP lost a considerable amount of money since the Affordable Care Act removed carriers’ ability to restrict policy sales to healthy customers in 2014. The CO-OP lost $18.4 million in 2015, mostly in the individual market, according to DCBS.
State regulators will take over Oregon’s Health CO-OP’s assets in order to prioritize paying outstanding claims. Laura Cali, Oregon’s insurance commissioner, said she believes the CO-OP has enough money to pay its outstanding medical bills.
“Our best guess right now is they can meet those obligations, but we need to verify that,” she said.
Allen said he realizes the CO-OP’s departure leaves many areas of the state with a serious lack of carrier choices. He said his agency will work to identify steps it can take to encourage carriers to re-enter certain counties. One possibility could be the extension of a state program that provided financial support to insurers but ended this year, he said.
In any case, Allen said two carriers is “certainly” enough going into 2017.
“There are something like 500 counties across the country that have just one carrier,” he said. “However, it’s something that we’re concerned about. Vigorous competition has been a hallmark of the Oregon marketplace.”
On Monday, a special enrollment period will begin during which CO-OP members with individual policies can buy new policies that will take effect Aug. 1. People can enroll via HealthCare.gov to access tax credits if they’re eligible or enroll directly through an insurance carrier or broker. Policies don’t take effect until the first premium is paid.
The state is advising businesses that provide Oregon’s Health CO-OP policies to their employees to contact their insurance brokers and take immediate action to find new policies that are effective by Aug. 1.
People with questions can contact the Oregon Health Insurance Marketplace at 1-855-268-3767 or firstname.lastname@example.org . More information is available at dfr.oregon.gov.
— Reporter: 541-383-0304,