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OIG report finds CO-OPs underperformed, didn't reach enrollment goals

Some states have already pulled plug on consumer operated and oriented plans

The 23 consumer operated and oriented plans (CO-OPs) created under the Affordable Care Act did not meet their initial program enrollment and profitability projects as of Dec. 31, 2014, according to a new Office of Inspector General (OIG) report.

Here's a look at some findings from the report:

  • Enrollment numbers. When the online marketplaces opened for business in 2014, the enrollment for 13 CO-OPs was significantly lower than expected. For example, the Arizona CO-OP's projected enrollment by Dec. 31, 2014 was 23,998--the CO-OP ended up enrolling just 869 residents.
  • Technical difficulties. The OIG points out that the low enrollment numbers may have been caused by website crashes, long wait times and failures to accurately capture all information submitted by consumers. Additionally, several CO-OPs experienced managerial changes, which affected their ability to sell coverage to consumers.
  • Net losses. The report notes that 21 of the 23 CO-OPs incurred net losses from Jan. 1 through Dec. 31, 2014. More than half of the 23 CO-OPs had net losses of at least $15 million, while 19 CO-OPs' claims expenses exceeded premium revenue.

The Louisiana Department of Insurance announced this week that Louisiana Health Cooperative will discontinue selling coverage at the end of 2015, and despite some first-year success, Iowa pulled the plug on its CO-OP at the end of last year. Thus, the OIG concludes its report with recommendations for how the Centers for Medicare & Medicaid Services (CMS) can improve the CO-OPs' performance.

The report recommends that CMS enhance its oversight of underperforming CO-OPs, work with state insurance regulators to identify and correct underperforming CO-OPs, and provide guidance when a CO-OP is no longer considered viable.

For more:
- here's the report (.pdf)

Related Articles:
Louisiana Health Cooperative becomes latest CO-OP to bite the dust
Start up, CO-OP insurers are expanding into new markets
Tennessee CO-OP freezes enrollment
Iowa's CO-OP pulls out of marketplace despite first-year success