Another Obamacare co-op is going under. InHealth Mutual in Ohio will be the 13th of 23 original co-ops to go out of business. InHealth has been handed over to the state Department of Insurance for liquidation. Columbus Business First reports current members have 60 days to pick an alternative plan:
Policies are still in effect as of now for its 21,800 members, mostly with individual coverage, but the state said they likely have 60 days to choose another plan on the federal Health Insurance Marketplace or risk losing federal subsidies.
The company’s Westerville office is being shuttered and the Insurance Department will administer policies until members switch coverage. The Ohio Life and Health Insurance Guaranty Association covers claims of up to $500,000 when an insurer is in liquidation.
Adjusted projections show InHealth Mutual would end the year with negative $20 million in assets if it were to continue to operate, according to the agency’s complaint in Franklin County Common Pleas Court.
Last year co-ops in Arizona, Utah, South Carolina, Colorado, Iowa/Nebraska, Louisiana, Michigan, New York, Nevada, Tennessee, Oregon, and Kentucky closed. Most of the co-ops cited the inability to claim money from Obamacare’s risk corridors program as a factor. Risk corridors was a temporary program designed to protect insurers against unexpected losses. Insurers who earned more than anticipated would pay in to a pool so those who earned less than needed to cover expenses could draw out money to cover their losses. In 2014, only $362 million was paid into the pool, and $2.87 billion was requested from it. Because HHS is prevented by law from supplementing the pool with outside funds, it could only pay out 12.6% of claims.
The co-ops were given start up loans by the federal government. Fox News reported in March that the 12 failed co-ops had not repaid any of the $1.2 billion they owed the government:
The failed cooperatives lost $376 million and exceeded the projected worst-case-scenario losses outlined in their loan applications by more than $260 million in 2014. They lost an additional billion dollars in 2015, according to the report.
“Once the co-ops got going in 2014, things went south in a hurry—both in terms of financial losses and enrollment figures that wildly deviated from the co-ops’ own projections,” Portman said. “Despite getting regular reports that the co-ops were hemorrhaging cash, HHS [the Department of Health and Human Services] took essentially no corrective action for over a year.”
In April the Daily Caller reported that 8 of the remaining 11 co-ops appeared likely to fail in 2016.