Citing its ailing financial condition, a Polk County judge has appointed the state insurance commissioner to assume management of CoOportunity Health, one of the two companies that have been selling coverage statewide on the Affordable Care Act's online insurance marketplace in Iowa.
As a result, the state said in a news release Wednesday that Des Moines-based CoOportunity has ceased taking enrollments on the exchange.
Insurance Commissioner Nick Gerhart petitioned Polk County District Court Tuesday, asking to be appointed "rehabilitator."
The petition was granted, the insurance division said in a news release Wednesday morning.
In an interview, Gerhart said the company grew too fast for its capital position.
"They had a large block of business with a weakening capital position," he said.
The insurance division issued a fact sheet Wednesday saying that people who signed up for insurance with CoOportunity on or before Dec. 15 would continue to have coverage provided they make their premium payments. Those who signed up after that date will not have coverage with the company.
The fact sheet added that claims should still be submitted as usual, but it warned health care providers may opt to leave the network used by CoOportunity Health, so people should contact their provider. It also said most policy holders "may find it in their best interests to find other coverage" before open enrollment ends Feb. 15.
Dana McNeill, vice president for corporate communications for CoOportunity, referred questions Wednesday to the insurance division. She said, however, the company would do all it could to cooperate with state and federal regulators and work to ensure a smooth transition for policyholders.
The company did not oppose Gerhart's petition to be appointed rehabilitator.
In its request to the court, the state said CoOportunity is "operating in a financially hazardous condition," and that it would experience "in the foreseeable future cash flow or liquidity problems."
The petition said that the company's financial statement filed on Oct. 31 showed a net loss of $45.7 million, equating to a 66 percent loss to its remaining surplus. It said as of Dec. 12, it had just $17.2 million in cash and invested assets, and that had fallen by about $10 million since Nov. 30.
A request to the federal Centers for Medicare and Medicaid Services, or CMS, for additional solvency funding was rejected last week, the petition said. Gerhart said he was told there were a number of suitors for the funds and insurers from other states got the money instead.
Gerhart said while CoOportunity is not insolvent he did not want to face a situation next year where health care providers weren't being paid.
"It's a liquidity crunch that's put them in this unfortunate situation," he said.
The petition said CoOportunity's largest asset is a $125.6 million payment expected from the federal Centers for Medicare and Medicaid Services in the second half of next year. However, it added CoOportunity believed nearly half that money was put in jeopardy because of the omnibus spending bill that Congress passed in mid-December.
The spending measure required that a key funding mechanism for insurers, called "risk corridors," be limited.
CoOportunity was founded in 2013, one of a number of cooperatives across the country that were spawned by the Affordable Care Act.
Its founders included David Lyons, a former Iowa insurance commissioner, and Cliff Gold, a former senior executive with Blue Cross and Blue Shield.
In its fact sheet, the insurance division said it would assume management of the company, attempt to correct existing problems, continue operations, maintain policyholder accounting and develop a plan for rehabilitation or a petition to present to the court for liquidation.
With these latest developments, Coventry Health Care of Iowa is the only insurer selling policies statewide on the Iowa exchange.
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