The Iowa insurance commissioner, court-appointed rehabilitator of CoOportunity Health, has determined that rehabilitation of the insurer is not possible and will ask an Iowa court to order it liquidated.
Among those jeopardized by the decision are an unknown number of the 113,000 Iowans and Nebraskans whose health is insured by the company, but who have not found a new insurer, and the agents and brokers who sold its insurance and haven't been paid commissions, in some cases for months.
CoOportunity is a cooperative nonprofit insurer that entered the Iowa and Nebraska markets to provide competition under the Affordable Care Act. But its financing by the federal government, with loans and grants, proved inadequate to the costs of insuring those Iowans and Nebraskans who signed up in its first year of operation, most of them Nebraskans. Many of them were people who had no health insurance and were buying it on the federally run marketplace with subsidies from the government.
"There is no expectation for additional cash inflow until the second half of 2015, and medical claims currently exceed cash on hand," the Iowa regulator said in an announcement. "This action is being taken to protect Iowans and Nebraskans to ensure that their medical providers and claims are paid by the state guaranty associations in Iowa and Nebraska."
In Nebraska, the guaranty of claims set by law for insurers that fail is $500,000 per person. Nebraska Insurance Commissioner Bruce Ramge said the guaranty is adequate to cover those insured in Nebraska.
“We want to ensure as seamless a transition as possible to other coverage and avoid any gaps in coverage,” said Iowa Insurance Commissioner Nick Gerhart. It isn't clear how many of those insured by CoOportunity have found other insurance since Gerhart's office took the company into rehabilitation on Christmas Eve.
In liquidation, his office will continue management of the company, maintain policyholder accounting, determine the company’s liabilities, liquidate assets, distribute proceeds from those assets in accordance with Iowa law and seek the dissolution of the company.
Among those who could make claims on assets are agents who sold the insurance and have not been paid commissions, agents like Kurt Kremke of Burwell.
"I sold a boatload of CoOportunity," Kremke said. "Close to 300 individual policies, groups on top of that. A lot of lives. ... They were far and away the best value for people's dollar. It was too good to be true."
He assumed the ACA system would back up the Consumer Operated and Oriented Plans, such as CoOportunity Health and others.
"That was a big lie on my part that I assumed to be the truth," he said.
He and other agents put in thousands of hours finding insurance for their clients, Kremke said, because most people are unable to intelligently navigate healthcare.gov, the program's website.
He is owed commissions going back months.
"I'm a small shop, two people plus me," Kremke said. "You take that money out of an agency, it makes it real tough."
Nebraska insurance professionals continue to point out that CoOportunity was denied continued federal financial support after signing up thousands more customers than co-ops in other states that have collected more money.
Gerhart's office said it expects to file a petition for liquidation next week. A hearing will occur in late February and an order to liquidate the company should take effect on Feb. 28, the Iowa office said.
As he did earlier, when he attempted to rehabilitate the company, Gerhart strongly recommended Friday that people obtain other insurance coverage as soon as possible, because CoOportunity in liqudation will no longer be a qualified health plan after March 1. Open enrollment continues until Feb. 15.
Employers with coverage in the group market need to work with their agents to obtain other coverage as soon as possible, Gerhart said. Upon liquidation, groups will have 30 to 45 days to secure coverage.