Colorado: Not So Fast There, Sparky: HealthOP CO-OP sues state to stay in business (UPDATE: Never mind...)
Just 3 days ago, Colorado HealthOP was stunned by the announcement by the state insurance division that they were pulling the plug on the ACA-established CO-OP:
It is with a heavy heart that I write to you today. This morning, the Colorado Division of Insurance (DOI)announced Colorado HealthOP will not be selling plans through the Connect for Health Colorado marketplace.
Please be assured that, as a Colorado HealthOP member, your coverage will remain in effect through December 31, 2015, so long as you continue to pay premiums. In two weeks, on November 1, 2015, the Connect for Health Colorado marketplace will open and you will have the opportunity to find another health insurance provider that will begin coverage for you on January 1, 2016.
Needless to say, we are astonished and disappointed by the DOI’s decision. We believe it is both irresponsible and premature.
Colorado HealthOP is a profitable start-up insurance company that is in a strong financial positionand, for two years, has served the critical needs of Coloradans like you by enhancing competition in the Colorado insurance market, driving down prices in the state health insurance marketplace and offering new, innovative choices to our more than 80,000 members throughout Colorado.
Unlike some of the other CO-OP shutdowns which were tragic but hardly unexpected, the announcement about CO HealthOP stunned anyone paying attention because although they do have serious financial issues carried over from 2014 due to the Risk Corridor Massacre, they're actually doing pretty well now and had just arranged for alternate financing only one day earlier:
Colorado HealthOP is excited to host over 200 members for our Annual Member Meeting in Denver tonight. We’re thrilled to report the CO-OP is exceeding budget projections and is on track to start paying down our federal loans.
We also have three viable financing options to ensure we have the capital reserves to meet our regulatory requirements. One option includes reinsurance financing. Another is receiving capital support from another successful CO-OP. And finally, we are talking with a private investor.
We’re working hard to ensure that we’re here to stay.
Yet just 14 hours later, the Colorado DOI lowered the boom anyway:
DOI took this action as the financial viability of the HealthOP came into question after learning it would receive considerably less money than expected from a federal, risk-based reimbursement program know as “risk corridor.” Earlier this month, the Centers for Medicaid and Medicare (CMS), announced it would only reimburse the nation’s health insurers 12.6% of what they were entitled under the program - only $362 million out of $2.9 billion promised. Colorado HealthOP was expecting around $16.2 million this year from the risk corridor payments, but instead will only receive about $2 million.
Well, it looks like the CO HealthOP seems to be scrappier and more resolved than you'd expect:
Colorado HealthOP sues state, asks to keep selling policies for 2016
Troubled nonprofit faces shutdown but says it's exploring options including venture capital infusion, a merger and loans from a reinsurance company
Troubled nonprofit insurer Colorado HealthOP on Monday sued for the right to continue selling policies in 2016 as it explores solutions to its financial problems.
The request for a temporary restraining order and preliminary injunction filed in Denver District Court seeks to reverse a decision by state insurance regulators to remove the co-op from Connect for Health Colorado, the health-insurance exchange.
...Colorado HealthOP warned earlier this month that its financial condition was precarious because its 2014 "risk corridor" reimbursement under the Affordable Care Act was $14 million lower than expected. The risk corridor was one of three mechanisms under the ACA designed to help insurers take on sicker, more expensive members who would enroll under a health exchange.
...In Monday's lawsuit, Colorado HealthOP officials said the state was "premature" in cutting the insurer from the marketplace, adding that independent actuaries' reports indicated the cooperative would be cash-flow positive and profitable for 2016.
"Of course, Colorado HealthOP will require a reasonable time to pursue possible solutions to replace the previously unanticipated but impending 2014 funding shortfall from (U.S. Department of Health and Human services) in 2015," officials wrote in the complaint. "Yet, Colorado HealthOP remains supremely confident that, within a reasonable time (probably a matter of four weeks), Colorado HealthOP will finalize and implement one or more of the solutions now proposed."
The potential solutions included: a merger with another state insurance cooperative, a loan from a reinsurance company and a infusion of private venture capital.
UPDATE 10/20/15: Oy. That was fast...OK, never mind...
Colorado’s largest nonprofit health insurer went down swinging Monday, trying but failing to challenge a state decision to close it because of precarious finances.
Colorado HealthOP, a nonprofit insurer set up under the federal health care law, unsuccessfully challenged the decision in a closed-door, two-hour hearing.
...Colorado HealthOP CEO Julia Hutchins said after Monday’s unsuccessful challenge that she was barred by law from describing it.
“All we can say is, the conclusion of the hearing is that we agreed to work with the Division of Insurance to wind down the company,” Hutchins said.