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DES MOINES, Iowa (AP) — A federally backed nonprofit health insurer created under the Affordable Care Act has been taken over by Iowa's insurance regulator and will end enrollments amid a financial squeeze, state officials said Wednesday.
Insurance Commissioner Nick Gerhart said the 120,000 members of CoOpportunity Health in Iowa and Nebraska may find it in their best interests to find new carriers by Feb. 15, the deadline for open enrollment for 2015 coverage.
Gerhart petitioned a court Tuesday to appoint him as rehabilitator of the West Des Moines-based cooperative, citing its "hazardous financial condition." Judge Arthur Gamble granted the request, which gives Gerhart power to manage the company's operations while coming up with plans to either rehabilitate its finances or liquidate its assets.
Gerhart told customers Wednesday that those who enrolled before Dec. 15 and make their premium payments would keep their insurance. Those who signed up Dec. 16 or later will not have coverage with the company, should enroll in other plans and will be eligible for refunds.
CoOpportunity Health will no longer offer its policies through Iowa's online marketplace, leaving plans offered by Coventry Healthcare as the only option for Iowans who qualify for the federal subsidies under the law.
Coventry's parent company, Aetna, said it would work with state and federal regulators "to do all we can to aid in a solution."
"That solution must be in the best interests of the people in both states and incorporate adequate pricing to ensure sustainability of coverage," Aetna said in a statement.
CoOpportunity Health was one of several customer-owned cooperatives approved by the federal government under the health law to offer competitive plans in the individual and small-group markets. The company, which formed last year, had been promised $146 million from the Center for Medicare and Medicaid Services.
The company was once seen as a new competitor for Iowa's dominant health insurer, Wellmark, that would expand consumer choice and potentially drive down prices. Wellmark has declined to participate in the exchange.
But the company's finances were a challenge, and they were made worse earlier this month when a provision adopted by Congress reduced the amount of its assets by about $60 million. CMS told the company last week that it would not provide additional funding immediately. The company, which did not oppose the state takeover, expects to receive additional federal risk mitigation payments in the second half of 2015.
The company is not yet insolvent, but its cash and invested assets dropped to $17.2 million earlier this month, down significantly from weeks earlier, the petition said. CoOpportunity Health is also facing "extremely high health care utilization" by its members, Gerhart's office said.
If the company goes out of business and liquidates its assets, customers were warned that their "coverage may be limited."
Employers that have a CoOpportunity Health group insurance plan were told to work with brokers to find new coverage.
The Iowa chapter of Americans for Prosperity, a conservative group backed by the billionaire Koch brothers, said the state takeover shows President Barack Obama's health law is flawed.
"Here in Iowa, we were promised more choicer and lower premiums, yet now we learn that one of two (companies) responsible for providing affordable insurance can't provide what the law promises," said its director, Drew Klein.