Health insurance co-op order means 59,000 must find coverage

Estimated read time: 3-4 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

PHOENIX (AP) — About a third of the Arizonans who bought health insurance on the federal marketplace for 2015 will have to find a new provider following action by state insurance regulators to suspend the state's nonprofit insurance co-op's ability to sell new policies over concerns it could fail.

The suspension of Meritus Health Partners means about 59,000 people will need new insurance unless the order is lifted. More than 50,000 of those people bought their plans through the marketplace.

Groups that work to help enroll people in health plans said Monday the decision's timing at the start of yearly open enrollment should lessen the impact. That's because all customers buying plans should be checking again anyway on the healthcare.gov website because prices and plans can change every year. People who shopped and changed plans for this year's coverage save an average of $507 a year.

"The roughly 50,000 Meritus policyholders have an opportunity to go look, redo their financial calculations to see if they are qualified for the same or a greater amount of financial assistance," said Allen Gjersvig, director navigator and enrollment services for the Arizona Alliance for Community Health Centers. "There is plenty of local help available."

Groups that assist with signups have hundreds of staff available to help during open enrollment, which began Sunday and ends Jan. 31. To have coverage in place by Jan. 1, you must sign up by Dec. 15. Certified and licenses assister can be reached by calling toll-free to 844-790-4946 or by going to www.coveraz.org .

The Department of Insurance suspended Meritus from selling or renewing policies on Friday because of concerns it could fail, according to orders issued Friday. Meritus disagrees and says it has enough money to continue operations at least through 2016.

The orders show the two Meritus groups, a PPO and an HMO, lost a combined $22 million from Jan. 1 through Sept. 31 and if the losses continued it would eventually become insolvent.

Meritus is spending about $2 million a month more than it currently takes in from premiums, chief operating officer Jim Walsh said in an interview Monday. But that loss was part of the startup nonprofit's business plan as it gains business and the firm has $30 million on hand — enough to keep operating through 2016 if the company doesn't see improving profitability as it expects.

The company cut staff in August to save $12 million a year and increased premiums for 2016 at the request of the Department of Insurance.

"This really is all about not if we have enough cash to get between now and the end of the year," Walsh said. "It's about are we going to make it in 2016 and would it be messy for them if we went out of business."

Meritus was one of 23 co-ops set up as part of a compromise in the Affordable Care Act to compete with for-profit insurance companies. But the co-ops have struggled, and Arizona's became the 11th to stop selling policies or outright fail.

The company said in a statement that it disagreed with the financial analysis that led insurance Department Director Andy Tobin to order the suspension. It said it remains in compliance with all insurance department regulations.

The company will continue servicing policies and paying provider bills while it winds down operations under the state order. Its board will meet Tuesday to consider what moves it may make next.

Meritus had a slow start in the marketplace, enrolling just over 2,600 people in 2014, its first year of operation. But that number soared this year, when it lowered rates to become more competitive.

About 154,000 Arizonans paid for individual policies bought on the federal marketplace as of June 30.