State’s co-op has failed to challenge and order to cease operations
Colorado’s largest not-for-profit health insurance provider closed its doors earlier this week. Colorado HealthOP, the state’s co-op set up under the Affordable Care Act, did attempt to save itself from the state’s decision to shut it down, but was ultimately unsuccessful in the attempt. The Colorado Division of Insurance has ordered the co-op to stop writing new policies, citing serious financial issues that the insurer has been facing. The state’s co-op is one of several that will be shutting down due to several issues in other parts of the country.
Co-op had accounted for 40% of the state’s insurance exchange market
Colorado HealthOP provides coverage to more than 80,000 people, accounting for nearly 40% of the state’s exchange market. Many consumers opted to find coverage through the co-op as it was an adequate alternative to the private market and the state’s established health insurance exchange. Consumers saw promise in the co-op because it offered policies with very low premiums, but the co-op has found it difficult to generate a profit or enough revenue to cover its operational expenses.
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Other co-ops in the country have faced a similar fate
The co-op is the seventh not-for-profit insurers to be closed in the United States this year. Federal officials announced last month that they would pay a small fraction of what these co-ops owed to insurers providing policies through these companies. States will have to find other ways to satisfy this financial issue. Co-ops were established with aid from the federal government and were expected to repay loans, but were never able to.
Co-ops find it difficult to repay debts to the federal government and insurers
In the case of the Colorado HealthOP, some $72.3 million had been borrowed, with the co-op reporting a net loss of $23 million last year. This meant that the insurer was unable to repay the money it owed, much like other co-ops in other states. The closure of the co-op will limit the options that consumers have when it comes to health insurance coverage, but the state’s exchange is still fully operational.