Shining Maryland co-op forced to go for-profit to survive
- Maryland's Evergreen Health, previously a rare success story among the 23 co-ops originally created under the ACA, is taking the unprecedented step of transitioning to for-profit in order to save itself from a possible shutdown, The Washington Post reports.
- Following state and federal approval, Evergreen's change will leave just five of the original co-ops standing, with the other 17 having failed or deemed sufficiently at risk to be ordered to shut down.
- Evergreen was on track to make a profit in 2016 after record financial results put it in the black for the first six months of the year, but its fortunes changed after it was billed $24.2 million by the federal government for the ACA's hotly contested risk adjustment program.
Evergreen's move further highlights the difficult conditions co-ops have faced in their short time of existence, and begs the question, if Evergreen can't keep going as a co-op, can the other few survive or are they next?
Risk adjustment assessments for 2015 were released at the end of this June and were widely received as a doomsday phenomenon for multiple co-ops including Connecticut's HealthyCT, Oregon's Health CO-OP, and Illinois' Land of Lincoln Health.
If Evergreen hadn't had to contend with its risk adjustment assessment, it would have made a projected profit of $2 million to $3 million this year, according to President and CEO Peter Beilenson, who was quoted by the Post.
The organization had attempted to persevere by challenging the risk adjustment program's payment methodology, but changes slated for 2017 and 2018 will come too late.
With its move to go for-profit, Evergreen will maintain operations for its nearly 38,000 enrollees and remain an industry competitor. However, the change represents the opposite of what the ACA sought to achieve by supporting the creation of the co-ops specifically to provide pro-consumer balance against the for-profit insurers.
The deal will involve a group of as-yet unnamed private equity investors taking over Evergreen from the federal government, as well as a loan to help sustain operations in the meantime, Beilenson said, adding that Evergreen had promised to repay a portion of the $65 million in federal loans it had received for its creation under the ACA.
- The Washington Post Maryland’s ACA health co-op will switch to for-profit to save itself