Dive Brief:
- Iowa insurance commissioner Nick Gerhart announced Friday that he would seek liquidation of CoOportunity Health, a carrier formed with $146 million in federal grants and loans under the Affordable Care Act.
- Special insurance-guarantee funds will pay outstanding claims, and customers are being asked to switch carriers ASAP. Gerhart will seek a court order to shutter the CO-OP, which should take effect on February 28.
- CoOportunity was one of 23 CO-OPs in the country and covered almost 120,000 lives in Iowa and Nebraska before it hit the skids late last year. Gerhart took over the faltering carrier in late December.
Dive Insight:
Iowa's CoOportunity Health is the first cooperative to fail, and its collapse marks the first time in 26 years that the Iowa insurance division has had to take control of a struggling carrier.
The failure provides fodder for critics of the ACA as some speculate that it may be just the first of many. At least two Iowa congressmen have demanded to know how other CO-OPs are performing across the country.
Experts agreed that the problem boiled down to the failure of premiums to cover the costs that members incurred. About 26,000 Iowans and 82,000 Nebraskans had purchased policies from CoOportunity last year.