The market in the State is continuing to experience a shakeup as a nonprofit insurer must liquidate assets.
For the second time, an Oregon health insurance co-op has received a receivership order. This started last week and will now be sending Health Co-op assets into liquidation after facing notable financial struggles.
The insurance company was a nonprofit and was consumer-operated, created under the ACA.
The Oregon health insurance company’s board of directors voted on Friday. Their decision was to consent to the receivership order from state regulators. This takes the first step toward liquidation. The insurer was originally formed under the Affordable Care act by consumers.
It had only 20,600 policyholders in the state, making it quite a tiny fragment of the total insurance industry. That said, those customers will now need to find their way to new health insurance coverage.
That said, this is the second co-op and third Oregon health insurance company sent into financial crisis.
After expected federal financial assistance never appeared, there have been a total of three insurance companies in Oregon facing similar situations. Health Co-op had been expecting to receive $5 million from the Centers for Medicare and Medicaid Services. This was a component of the risk adjustment program from the federal government.
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However, instead of receiving the $5 million, it was informed that it was in an owing situation. The federal government told Oregon’s Health Co-op that it was not entitled to the $5 million payment, but that it owed $900,000 to that agency. When that amount was combined with the co-op’s $18.4 million loss last year, the company simply could not afford to continue.
Finally, state regulators determined that the Oregon health insurance co-op was no longer in a financially stable position. “It presented not just a hit to capital and surplus but a cash flow problem,” said Oregon Insurance Commissioner Laura Cali. Upon making that determination, Cali’s office sent a receivership order to the co-op. The board voted to accept it.
In January, Moda Health Plans were taken into state supervision due to the crumbling financial situation of that company. Again, that insurer had expected tens of millions of dollars it didn’t receive. Similarly, Health Republic, another co-op, failed last year when its anticipated federal funds didn’t show.