Struggles of Maine health insurance cooperative highlight challenges facing other co-ops
File photo / Tim Greenway
Kevin Lewis, CEO of Community Health Options, left, and Robert Hillman, COO, in the nonprofit health insurer's headquarters within Lewiston's historic Bates Mill complex.
The news that the only nonprofit consumer-operated and -oriented health insurance company in Maine and the only one in the nation to make money last year on the Affordable Care Act's public insurance exchanges is suspending individual enrollment adds to doubts over the future of the co-ops.
The state-based nonprofit insurers were created in the federal health care overhaul three years ago to add competition to insurance markets, but a dozen of the 23 created have already folded.
The Associated Press reported that 10 of the 11 surviving co-ops lost on average more than $21 million in the first nine months of this year, ranging from $3.9 million to $50.7 million.
Lewiston-based Community Health Options, the only co-op that was profitable in 2014 with a net income of $5.9 million, loss $17.3 million in the third quarter of this year, CEO Kevin Lewis told Mainebiz earlier this week.
The AP reported that the co-ops have been hurt by soaring medical and prescription drug costs, like other health insurers, and have had to spend money building up their network of providers and marketing their plans to customers.
Co-ops have also received significantly less financial backing than they expected from the federal government that was meant to cover losses as the co-ops began building themselves up.
The government risk corridors fund is paying slightly under 13% of what co-ops were expecting to receive this year for their losses, according to Maine Bureau of Insurance Superintendent Eric Cioppa.
Standard & Poor's analyst Deep Banerjee told the AP that it is likely impossible for a startup in the health insurance industry to make any significant money in the first couple years. He said he expects more co-ops to struggle heading into 2016, but it’s difficult to predict how many more will fail.
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State, feds at odds over how to address Community Health Options' financial woes
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