Nevada Health CO-OP closes amid financial woes
Nevada's consumer operated and oriented plan, Nevada Health CO-OP, announced that it will cease operations beginning Jan. 1 due to "market conditions."
"Rather than spending resources on next year's uncertain market, we would rather make sure we protect our current members," CO-OP Member and Board Director Stacey Hatfield says in the announcement. "This is all about providing the most affordable, effective health insurance and service possible."
CO-OPs were initially formed during the beta round for the Affordable Care Act, and were meant to increase competition for existing carriers. Case in point: Nevada Health CO-OP dominated the 2013 enrollment period by enrolling more than one third of the market; the nonprofit beat out UnitedHealth Group and Anthem Blue Cross and Blue Shield, reports the Las Vegas Review-Journal.
But once the market stabilized in 2014 and 2015, the CO-OP dipped in the ranks after reporting a $19.3 million operating loss in 2014. From January through June of that year, the CO-OP lost $22.7 million, notes the article.
Problems started early for the CO-OP--just weeks after the exchange launched in October 2013, many consumers reported that doctors whom they believed to be in network were, in fact, out of network. Additionally, some providers said the CO-OP's reimbursement process took up to three months.
But perhaps the exchange's biggest issue may have been its overhead, suggests the article. The CO-OP's administrative expense-to-premium ratio was 37 percent, which is nearly double the 20 percent allowed under the ACA. These costs included paying one of the CO-OP's top execs upwards of $340,000.
Nevada Health isn't the only CO-OP to struggle. A recent Office of Inspector General report found that 21 of the country's 23 CO-OPs incurred net losses, and 13 of the CO-OPs' enrollment figures were significantly lower than expected, FierceHealthPayer previously reported.
Execs well-paid even as CO-OPs struggle
How Maine Community Health Options keeps premiums affordable
Maine Community Health Options CEO: 'We had a desire to do things differently'
OIG report finds CO-OPs underperformed, didn't reach enrollment goals