+ Regulatory
Katelyn Kivel | Nov 5, 2015

Utah's health insurance co-op is 10th in U.S. to fail this fall

Utah residents looking to obtain health insurance from the marketplace during open enrollment will have one fewer option because Arches Health Plan, the state’s insurance co-op, has closed its doors.

The failure of Arches Health Plan, which enrolled 66,000 in Utah, leaves 20 mostly rural counties with only one option for insurance: SelectHealth. Despite the best efforts of the Utah Insurance Commission, no other providers were able to enter the marketplace in those areas before open enrollment began this month.

Arches was told Oct. 1 that it would not be receiving $8.7 million in federal funds it had expected and the results were catastrophic. Since the co-op is customer-owned, it lacked the deep financial reserves to accommodate such a loss and were not able to sell stocks to cover the massive shortfall. As a result, Arches was recently placed in receivership.

Arches plans obtained through the marketplace will continue until the end of December while those obtained through an employer will last until they were scheduled to expire.

“It’s important to keep paying those premiums,” Utah Insurance Commission Public Information Officer Steve Gooch said. “If you don’t, the insurer won’t pay on any claims you might have in the next month and a half.”

Despite its failure, the co-op will continue to operate until the scheduled end of all currently active policies.

Utah’s co-op is the 10th health insurance co-op to fail this fall. Co-ops in Tennessee, Kentucky, Oregon, Colorado, South Carolina, Louisiana, New York, Nevada and Arizona all announced their closings this year.

“If (consumers are) shopping in open enrollment right now, we wanted to make sure that they knew that the co-ops that remain in the marketplace were financially viable, can make it through the entire year,” Centers for Medicare and Medicaid Services CEO Mandy Cohen said during testimony Tuesday before the House Ways and Means Subcommittee on Health.

As inconvenient as these announcements are, the situation when Iowa’s co-op failed in January of this year, in the middle of an insurance year, affected 68,000 people who either had to rush and change plans or face a lapse in coverage.

“Our first priority was to make sure there wasn’t going to be a midyear failure next year for any consumers. And that’s how we went about our decision-making,” Cohen said. “We played it very conservative in that way, which is why I think there’s been so much activity in the last several months.”

Consumer-operated insurance co-ops began when the Affordable Care Act went into effect in 2013 and were intended to offer competitive plans for low-income shoppers. They have had rocky financial performance, requiring $2.4 billion in government-issued startup and solvency loans. According to a summer Health and Human Services report, only one co-op is not losing money.

Congress is holding hearings this week on the state of co-ops across the country in reaction to the large number of closures this year.

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