ACA Government Co-Ops: Is This Experiment Working In Your State?

[scagnt83]

From the link Tyler provided above .......



Haven't seen a fully insured MEWA in years. This one is self funded. Only fully insured plans are covered by the guaranty fund.

I didnt realize that was self funded. You are correct, they are not covered by the SGA.

 

[AllenChicago]

It appears that each state has its own rules for paying outstanding medical claims after a Cooperative goes belly-up. Here's what Iowa/Nebraska has..

"In addition to the massive loss that federal taxpayers face from CoOportunity's collapse, policyholders in Iowa and Nebraska will likely face higher future premiums so the states can honor their guarantees of financial protection of up to $500,000 per person enrolled in a liquidated insurance company."

Source: 2015 Senate Report - National ACA Co-op Status - Obamacare

 

[scagnt83]

It appears that each state has its own rules for paying outstanding medical claims after a Cooperative goes belly-up. Here's what Iowa/Nebraska has..

"In addition to the massive loss that federal taxpayers face from CoOportunity's collapse, policyholders in Iowa and Nebraska will likely face higher future premiums so the states can honor their guarantees of financial protection of up to $500,000 per person enrolled in a liquidated insurance company."

Source: 2015 Senate Report - National ACA Co-op Status - Obamacare

That $500k is the SGA limit. The limit varies by state. It is a very state specific thing.

Here is what really struck me from that link:

Many other co-ops appear to be failing. According to S&P, almost a third of the co-ops received more than $20,000 in federal loans for each person covered in 2014:

The Minuteman Health Inc. Co-op in Massachusetts got more than $156 million and covered only 1,822 people – nearly $86,000 per enrollee.

The Land of Lincoln Mutual Health Insurance Co-op in Illinois got more than $160 million and covered only 3,428 people – nearly $47,000 per enrollee.

Oregon's Health Co-op got nearly $57 million and covered only 1,279 people – more than $44,000 per enrollee.

Meritus Mutual Health Partners Co-op in Arizona got more than $93 million and covered only 2,679 people – nearly $35,000 per enrollee.

Community Health Alliance Mutual Insurance Co-op in Tennessee got more than $73 million and covered only 2,094 people – nearly $35,000 per enrollee.

Coordinated Health Mutual Inc. Co-op in Ohio got more than $129 million and covered only 4,996 people – nearly $26,000 per enrollee.

HealthyCT Inc. Co-op in Connecticut got more than $128 million and covered only 6,094 people – more than $21,000 per enrollee.

Many of the co-ops that exceeded their initial enrollment projections are also in a precarious financial situation. These include Arches Mutual Insurance Co-op in Utah (74 percent net loss as a percentage of reserves), Kentucky Health Co-op (53 percent net loss as a percentage of reserves), and Consumers Choice Health Insurance Co-op of South Carolina (50 percent net loss as a percentage of reserves).

 

[sman]

That $500k is the SGA limit. The limit varies by state. It is a very state specific thing. Here is what really struck me from that link:

What it tells me is that whoever did the projections for these co-ops, and ACA, suck at their job.

 

[AllenChicago]

That $500k is the SGA limit. The limit varies by state. It is a very state specific thing.

The Illinois health insurance SGA limit is $500,000 per medical claim, as well.
Ref: Insurance Guaranty Associations

But it looks like the fund isn't actually "funded" until after a company goes bankrupt...

"Guaranty funds largely are funded by industry assessments, which are usually collected following insolvencies. These assessments raise funds to pay claims and administrative and other costs related to the guaranty funds claim paying activities."
Ref: Frequently Asked Questions | Illinois Insurance Guaranty Fund

At least that method will keep the crooks from pilfering the SGA fund the way they did our state's teachers pension/retirement account.

 

[scagnt83]

What it tells me is that whoever did the projections for these co-ops, and ACA, suck at their job.

They knew exactly what they were doing. Here is another excerpt:

Many of the co-ops underpriced coverage and were counting on a bailout through Obamacare's risk corridor program.

Basically they were buying business and counting on Obamabucks to prop them up.

 

[somarco]

better chance of the lawyers chasing CMS/HHS for allowing a deficient carrier onto the marketplace........

What it tells me is that whoever did the projections for these co-ops, and ACA, suck at their job.

From AC's link ......

F

rom the start, the Obama administration projected that the co-op program would hemorrhage taxpayer money. In its supplement to the president's 2013 budget, the Office of Management and Budget estimated that taxpayers would lose more than 40 percent of the value of the co-op loans – an extraordinary amount even for risky government loan programs.

Funding

Guaranty funds largely are funded by industry assessments, which are usually collected following insolvencies.

That is typical.

Many moons ago FL set up a risk pool for uninsurables. Carriers were to "contribute" a % of premiums to the pool to pre-fund it. (I don't recall the % but it was low, I believe less than 1%).

If the fund ran out of money (designated premium taxes + policyholder premiums) participating carriers were assessed based on their pro-rata share of the health insurance market.

Pretty sure the risk pool went belly up within a couple of years.

Many of the co-ops underpriced coverage and were counting on a bailout through Obamacare's risk corridor program.

Basically they were buying business and counting on Obamabucks to prop them up.

Co-ops were no different from the carriers that also were betting on the come. The only difference is, the carriers may not have been quite as stupid as the people running the co-ops.

Wasn't one of the midwest co-ops that took a dirt nap run by a former BX exec?

 

[AllenChicago]

June 23, 2015

If the information delivered by the National Alliance of State Health Co-Ops (NASHCO) was the entire story, we'd be looking at some serious long-term competition to the private individual health insurance sector.

REF: Nashco

The Co-Ops are crowing about their high enrollment numbers, but keeping their year-to-date 2015 financials hidden from view. Standard and Poor's, A.M. Best, and several financial publications, are not fooled. They're sounding the alarm.

 

[somarco]

Co-ops are just another Solyndra.

 

[healther]

Co-ops are just another Solyndra.

I can't argue against that... and if we were committed to more than a calendar year, I might be concerned. It's all about the amount of risk one is willing to absorb... is it worth double the premium for me to go with another carrier given the astronomical odds against this carrier defaulting on it's obligation... for me, absolutely not. Are the odds greater that this carrier would default vs. the next, yes, but not to a worrisome degree... IMO.