Only seven are left out of the original 23 — and those seven are struggling to find a way to survive.
A Kaiser Health News report said that those seven health co-ops — referred to in the Affordable Care Act as consumer operated and oriented plans — are, despite their survivor status, having a tough time staying in business. Eleven are still operating, but four of them will shutter by the fall thanks to insolvency. And the period of their demise is short: all 23 were operating in 2014.
Problems dogging the co-ops include a lack of diversification in their client base; the need to pay out funds to other insurers that are classified as bearing higher risk; and a lack of promised federal funds, which hit small insurers hard.
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Co-ops are operated as nonprofits and were on the receiving end of federal loans as a means of providing an alternative to commercial insurance. Believers in the mission of the co-ops felt they would boost competition by allowing people to buy their health coverage from companies that were more focused on consumers than on profits.
But some brought in too many enrollments too quickly, swamping themselves in healthcare costs, while others couldn't bring in enough members to spread risk and lower overall costs. And then there was the cut in federal funds, which wasn't welcome news to any of them.
Some of the remaining co-ops are attempting to renegotiate contracts with hospitals and other providers; the report said that Maine's co-op, Maine Community Health Options, has contracted with Express Scripts as its new pharmacy benefit manager.
It hopes that the switch will save about $14 million annually by reducing drug prices. It also intends to broaden its reach during the 2017 enrollment season, seeking out the large-employer market to woo new customers rather than sticking with the small-business and individual mandate it originally held. Maine Community Health does expect to make money, but not until 2017.
And then there are other measures: raising premiums, cutting staff and even raising money from investors — something only recently allowed and a strategy being employed by New Mexico Health Connections.
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