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The Daily Signal
Arizona’s
Obamacare Co-Op to Shut Down After Receiving $93.3 Million From the
Government
Meritus Health Partners, a co-op in Arizona, announced Friday it would
be closing its doors. The co-op is the 11th of 23 created under
Obamacare to shutter. (Photo: Lucy Nicholson/Reuters/Newscom)
Two days before the start of Obamacare’s open enrollment period, a
nonprofit health insurance provider located in Arizona announced that
it would be closing its doors, leaving more than 56,000 consumers to
purchase new insurance plans.
On Friday, the Arizona Department of Insurance announced that Meritus
Health Partners is winding down its operations and will no longer offer
coverage in 2016. Meritus Health Partners is the 11th of 23 co-ops, or
consumer-operated and oriented plans, created under Obamacare to shut
its doors. The co-ops have received a combined $2.4 billion from the
federal government.
Consumers currently insured by Meritus will remain covered for the rest
of the year.
“[W]ith open enrollment beginning this weekend and many Meritus
policyholders subject to re-enrollment, it was vital that the
department step in and protect Arizona citizens,” Andy Tobin, the state
director of insurance, said in a statement.
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Meritus Health Partners received $93.3 million in start-up and solvency
loans from the Centers for Medicare and Medicaid Services. Despite the
money the co-op received, the nonprofit insurance company struggled to
enroll consumers in 2014, an audit from the Department of Health and
Human Services Office of the Inspector General found.
According to the report, just 869 Arizonans purchased plans from
Meritus Health Partners by the end of 2014. The co-op had projected
that it would enroll 23,998 consumers.
Meritus Health Partners was one of 13 co-ops that failed to meet
enrollment projections, the government watchdog found.
Last year, the co-op offered some of the cheapest plans on the federal
exchange, HealthCare.gov. As a result, Meritus Health Partners enrolled
more than 56,000 consumers as of June 30, regulatory filings show.
Still, the inspector general found that the Arizona co-op had lost $7.2
million by Dec. 31, 2014. It wasn’t the only co-op to report losses.
Twenty-two of the 23 co-ops, including Meritus Health Partners, were in
the red by the end of 2014.
Since the co-op opened in December 2012, it’s lost more than $78
million, according to the Arizona Department of Insurance.
Co-ops were created under Obamacare to create competition in regions
where few plans would be offered to consumers. Though the federal
government awarded more than $2.4 billion to the 23 co-ops that were
eventually established, roughly half have struggled to survive.
As of Friday, 11 co-ops have shut their doors. Those co-ops received
more than $1.1 billion from the Centers for Medicare and Medicaid
Services. More than 690,000 Americans have enrolled in health insurance
plans offered by the co-ops.
Seven of those 11—in Tennessee, Kentucky, Oregon, Colorado, South
Carolina, and Utah—pointed to lower than expected payments from
Obamacare’s risk corridor program as the reason for shuttering.
The Obama administration told insurance companies last month that they
would receive just 12.6 percent of their requested payments from the
federal government through the program, which was intended to stabilize
in the health insurance market disrupted by the implementation of the
Affordable Care Act.
Meritus Health Partners learned that they would likely receive less
from the risk corridor program several months ago, according to the
Arizona Republic. To make up for the lower payments, the co-op sought
to raise its rates next year.
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