DENVER – A dire funding announcement last week could leave thousands of consumers using Colorado’s federally-backed health insurance nonprofit cooperative scrambling.
The Centers for Medicare and Medicaid Services announced Thursday that health cooperatives will receive only about 12.6 percent of the funding that was requested to stay afloat.
It’s unclear just how much Colorado’s cooperative, Colorado HealthOP, needed to stay solvent. But officials with the provider said it certainly needed more than 12.6 percent, given evidence that it takes at least three years to build risk-based capital.
“The worst part is that the administration was saying up until a week ago we’re going to make good on our obligations. If we had known earlier that it was going to be 12.6 percent, we could have planned for that, and now we just find ourselves scrambling,” said Julia Hutchins, executive director of Colorado HealthOP.
So far, Colorado HealthOP has received $72 million in federal low-interest loans. Hutchins said the nonprofit was on track to show positive net income going into next year, positioning itself to pay back the funds.
The cooperatives stem from the Affordable Care Act. The idea at the time was to establish co-ops as a means to compete in the insurance marketplace, thereby potentially lowering the price of premiums for consumers.
The risk-corridor program under the ACA was supposed to offset costs incurred by new providers. But when it came time for risk-based capital funding, investments were cut short through federal budget talks last year.
The latest membership numbers reveal that 1,415 people in La Plata County are insured by Colorado HealthOP. There are 8,400 members throughout most of the Western Slope region and 80,000 throughout the entire state.
Members and Colorado HealthOP officials will have a tough decision to make by Nov. 1, when the next yearly open enrollment period begins. The choice will be whether to continue within the marketplace, or completely back out. Hutchins said members will be covered at least through 2015.
“We’re a nonprofit, we’re not in this for the money,” she said. “We really care about our members, and we would never go into the marketplace if we didn’t believe that we could provide and make good on our obligations for our members.”
To address the funding issue, co-op stakeholders must navigate a political maze. Republicans have been critical of the ACA since its inception and have vowed to block funding.
U.S. Sen. Cory Gardner, a Republican, sent a letter last week to Health and Human Services Secretary Sylvia Burwell, asking questions about the solvency of Colorado HealthOP. Co-ops in several states have failed.
“Obamacare was hastily passed on a strictly partisan vote, and its flaws and broken promises continue to harm Coloradans,” Gardner said Monday in a statement.
Some accused Gardner of grandstanding with the letter to Burwell, but he responded: “I wrote a letter ... because I was concerned about Colorado HealthOP’s financial viability. HHS’s recent decision gravely threatens the co-op’s continued operation and that can be added to the very long list of Obamacare’s broken promises.”
For now, all cooperatives can do is plead with Congress to provide funding. Colorado HealthOP has asked members and supporters to contact Congress to request additional dollars.
“When you step back for a second and say, ‘what have we accomplished?’ We put up a health insurance company in no time. ... We’ve been beating our financial projections all year. We were on the cusp of being able to make a profit and payback our loans,” Hutchins said. “Now this?”