Health Care Success for Midwest Co-op Proves Its Undoing
RED OAK, Iowa — A few days after Christmas, Lisa Lovig’s doctor called with jarring news. The health insurer covering her cancer treatments had run out of money, and its future was at best uncertain.
“I was terrified,” said Ms. Lovig, 59, who has pancreatic cancer and relies on her insurance to cover frequent doctor appointments, tests and a litany of expensive drugs. “I didn’t know what was going to happen to me.”
Her insurer, CoOportunity Health, was one of 23 nonprofit cooperatives created under the Affordable Care Act to generate more competition and choice in insurance markets dominated by huge for-profit companies. Many of these newcomers to the industry, seeded with hundreds of millions of dollars in federal loans, struggled to attract customers after the law’s online insurance exchanges opened in 2013. But CoOportunity had seemed to flourish, with over 120,000 customers in Iowa and Nebraska — far more than the 15,000 it had anticipated — by the end of last year.
Its success apparently helped doom it. CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low. After taking control of the co-op in late December, Mr. Gerhart decided last month that it could not be saved and asked a court to liquidate it. The co-op, he said at the time, faced more than $150 million in liabilities. That left its customers scrambling for new coverage, and providers wondering if millions of dollars in outstanding claims would ever get paid.
Read the rest at: http://www.nytimes.com/2015/02/17/us/success-proves-undoing-of-health-insurance-co-op.html
