One of the vaunted advances of the ACA, in response to public request, was the creation of a public plan option to compete with private insurers offering coverage in the exchanges. These new Consumer Operated and Oriented Plans (COOP) are slipping into insolvency. All but one lost money in 2014 and one failed spectacularly with the loss of 20% of all COOP enrollees nationwide. Finally, many of the remaining COOPs appear to be setting artificially low premiums to gain market share, losing money taxpayers are expected to cover. There are, of course, many reasons, and a lot of finger pointing, but the fact remains that they are competing for the same people as the private insurance carriers with a lot less capitalization and recognition and, in the end, insufficient enrollment to adequately spread risk that rose almost as soon as it began, as claims ran higher than expected. In the end, all the COOPs have borrowed more than $75 million in startup funds that must be repaid within five years along with $2 billion in low interest loans that are due within 15 years…and then the federal government, through HHS, provided emergency funding of $355 million in the last four months of 2014.
No COOP eration with the ACA – the failure of a good idea
July 29, 2015