CoOportunity Health

In what came as a surprise to many, Iowa’s Insurance Commissioner, Nick Gerhart, filed a petition in Polk County District Court on December 23, seeking court authorization under state insurance laws to assume management authority over CoOportunity Health, Inc., toward the end of rehabilitating the company’s substantially declining financial stability. The district court granted the order on that same day, transferring the company’s assets to the commissioner for administration and control. CoOportunity’s board of directors elected not to oppose the petition. The Nebraska Insurance Commissioner has suspended CoOportunity’s authority to do business in that state in light of the Iowa action.

Iowa insurance laws permit insurance division rehabilitation efforts when an insurer no longer evidences sufficient financial strength to meet its ongoing financial obligations to policyholders. The commissioner’s petition noted that CoOportunity at this time is solvent, but its current lack of needed additional revenues places it in a “financially hazardous” condition. The goal of the commissioner is rehabilitation but if not feasible, the company’s assets will be liquidated. Purchase by another insurer is a possibility.

In its first year of operations, CoOportunity–a non-profit insurer domiciled in Iowa and operating both in Iowa and Nebraska under both states’ laws and rules of the newly established federal health insurance CO-OP (Consumer Operated and Oriented Plan) program, had experienced early program success by enrolling an unanticipated 120,000 Iowans and Nebraskans through individual and small group policies. At the same time, however, the company experienced high unanticipated losses, leading to a drop in assets from $121.5 million to $17 million at the time of the petition’s filing. A $45.7 million net loss experienced by the company in the first 10 months of 2014 operations equated, the commissioner said, to “a 66% loss to remaining surpluses.” From November through December 12, the company’s assets continued to decline, dropping from $47.1 million to $17.2 million, a level and operational trend that threatened the ability of the company to meet its future health claim obligations to its policyholders.

Immediate sources of needed monies could not be identified. The federal Centers for Medicare & Medicaid Services (CMS), which provided start-up loan funding for CO-OPs, recently informed CoOportunity that it would not receive additional loans in this last round of funding. CoOportunity has received $130.6 million in solvency loan funds and $15.4 million in operational loan funds from CMS, including loan funds of $32.7 million awarded to the company at the end of September. The company is slated to receive an additional $125.6 million from other CMS program sources, but not until the second half of 2015 and $60 million of that amount is currently threatened by potential congressional budget action.

The Insurance Division cites “extremely high health care utilization” as a major factor affecting CoOportunity’s deteriorating asset position.

The Insurance Division, in frequently asked questions (FAQs) posted on its website (, helps policyholders to understand what this step toward regulatory rehabilitation means to them. To have continued coverage, policyholders must pay their premiums. Claims may continue to be submitted through CoOportunity as usual. The Division “will control the company and ensure that claims are paid according to contract provisions.” Even if rehabilitation is not successful and the company is liquidated, state insurance laws protect policyholders and their claims up to $500,000 per insured person.

The FAQs further clarify that coverage with CoOportunity during rehabilitation “should not impact your provider’s standing with CoOportunity.” The Division, however, notes that providers currently in the CoOportunity network may opt to leave that network and advises policyholders to contact their providers to make sure they remain in network.

The Division further advises: “Most policyholders may find it in their best interests to find other coverage before the end of open enrollment” which closes February 15, 2015. The Nebraska Insurance Department has similarly advised policyholders in that state.