Oregon ObamaCare co-op latest failure in troubled program

Oregon ObamaCare co-op latest failure in troubled program
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Oregon’s nonprofit ObamaCare health insurance co-op is winding down operations due to financial problems, the second such announcement this week for the troubled co-op program. 

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The announcement is just the latest in a long string of failures of ObamaCare’s co-ops, non-profit health insurers set up to increase competition with established insurers. Before this week, just 10 of the original 23 co-ops remained functioning, and Republicans have seized on the problems. 

Oregon’s Department of Consumer and Business Services (DCBS) announced Friday that it is taking over the insurer, known as Oregon’s Health CO-OP, and will liquidate the company. 

The plan’s 20,600 enrollees will be forced to find new health insurance, with their plans ending on July 31. The state will hold a special sign-up period to allow these enrollees to find new coverage. 

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Regulators generally try to avoid forcing people to find new plans in the middle of the coverage year, as the state acknowledged. 

"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," DCBS Director Patrick Allen said in a statement. "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." 

Connecticut announced on Tuesday that a co-op there is winding down operations as well, though in that case there is at least some chance that the company could end up surviving, the state said. 

In both instances this week, the most immediate cause of the problems was ObamaCare’s “risk adjustment” program, which seeks to protect insurers with sicker enrollees by taking money from plans with healthier people and giving it to plans with sicker people. 

The Obama administration on June 30 announced the payments that each insurer would either make or receive under the program. Many small, less experienced insurers, such as co-ops, had to pay into the program, a loss of funds that was very damaging to some. 

Oregon said that its co-op had expected to receive $5 million under the risk adjustment program, but instead had to pay out $900,000, leading to the failure of the company. 

"Unfortunately, as a startup, Oregon's Health CO-OP is not in a position to sustain these losses while meeting its obligations to policyholders," Allen said. "We are working closely with the company on an orderly wind-down of its business."