Nearly all nonprofit health insurance co-ops are shutting down

Nonprofit health insurance co-ops - Stethoscope

Of the approximately two dozen that existed during the first few years of ACA, only 3 will soon remain.

In the early days of the Affordable Care Act (ACA), there were about two dozen nonprofit healthy insurance co-ops. However, now that New Mexico Health Connections announced it will be shutting down at the close of 2020, that number will fall to only 3.

Among the three remaining, one is in Maine, one is in Wisconsin and one is in Idaho and Montana.

That last of the nonprofit health insurance co-ops serving Idaho and Montana will be stepping into Wyoming in 2021. Therefore, while the numbers are falling, one of the groups is actually expanding. All the existing not-for-profits made money last year after having clawed their way through some tough initial years, according to National Association of Insurance Commissioners (NAIC) data.

These groups are also all aligned to receive tens of millions in federal government dollars under an April ruling made by the Supreme Court. That court decision stated that the federal government’s actions to withhold billions from insurance companies was inappropriate. The funds had been intended to help ease losses from 2014 through 2016, during the first three years of ACA insurance exchanges. Though the payments were meant to assist insurers who were suffering losses, they were even more critical to co-ops, as they were operating with the smallest financial support.

At their peak, nonprofit health insurance co-ops served more than 1 million enrolled members in 2015.

That number has fallen considerably. It is estimated that only about 128,000 people are now covered by these co-ops, representing only about 1 percent of the 11 million people enrolled in health care through the ACA marketplaces.

In 2010, the nonprofits were added at the last minute in order to address Democratic lawmakers who had not managed to secure a public option health plan on their marketplaces. Congress offered $2 billion in start-up loans. However, almost all the co-ops found themselves struggling or entirely unable to compete with established health insurers that already had far more backing and capital and were recognized brands.

Nonprofit health insurance co-ops - StethoscopeHealth experts and state insurance officials remain hopeful that the remaining three nonprofit health insurance co-ops will make it through.

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