Oregon co-op closure leaves 8 of original 23 standing

Oregon’s Health CO-OP, one of two nonprofit co-ops set up in the state by the Affordable Care Act, will shut down at the end of July.

The decision is based on the 2015 risk-adjustment payment data released by CMS, which had the co-op owing more than $900,000. The insurer said that outcome, along with the $18.4 million it lost in 2015, “made it clear it was no longer feasible” to continue operations.

“It is with great sadness that I announce Oregon's Health CO-OP is shutting down its doors immediately,” said the co-op’s CEO, Phil Jackson. “The board of directors agreed that it is in the best interests of our members and community that we wind down our operations. As a result of this decision, we are working with the Division of Financial Regulation (DFR) to develop a plan and begin taking steps to facilitate the transition of our membership to other insurers."

Oregon’s other insurance co-op, Freelancers of Oregon, came out better in the payments report, owing around $1.9 million under risk-adjustment, but is due to be paid nearly $4.6 million under the reinsurance program.

It will have to be a quick transition for the co-op’s 20,600 policyholders, with 11,800 members in the individual market and 8,800 through small and large groups. All policies will end July 31, leaving enrollees just weeks to select a new plan through a special enrollment period. Adding to the difficulties is the fact several insurers, like Moda Health, are leaving the Oregon exchange at the end of 2016.

“We understand changing plans in the middle of the year will be difficult for Oregonians, but this action was necessary given the sudden deterioration of the company's financial position,” said Patrick Allen, director of the Oregon Department of Consumer and Business Services. “We will be working hard over the next few weeks to reach Oregon's Health CO-OP policyholders to ensure they are aware of this change and to help them pick a new plan that best meets their needs.”

Other states have avoided a mid-year closure of their co-ops, like in Ohio, where InHealth plans will run through the end of 2016.

Oregon’s Health may not be the last co-op to shut its doors this year over risk adjustment payments. Connecticut’s Healthy CT has been placed under supervision after CMS said it owed more than $2 million, while Illinois regulators took the unusual step of blocking its co-op, Land of Lincoln Health, from making a $31.8 million payment to the federal government in order to stave off closure.