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Nonprofit Health Insurance Co-Op Liquidations

American Health Lawyers Association

Wendy G. Marcari and Jackie Selby, Members of the Firm in the Health Care and Life Sciences practice, in the firm’s New York office, authored an American Health Lawyers Association Email Alert titled “Nonprofit Health Insurance Co-Op Liquidations.”

Following is an excerpt:

A growing number of health insurance co-ops or “consumer operated and oriented plans” created under the Affordable Care Act (ACA) are shutting down on their own initiative or on the orders of state regulators because of their precarious financial condition. The failed co-ops include, among others, those in Colorado, Kentucky, Louisiana, Nevada, New York, South Carolina, and Utah, as well as one serving Iowa and Nebraska.

Nonprofit co-op insurers were intended to increase competition and provide less expensive coverage to consumers. However, low prices, lack of adequate government funding, restrictions on the use of federal loans for marketing, and low “risk corridor” payments from the Centers for Medicare & Medicaid Services (CMS) created financial challenges for these insurance plans. Facing insolvency, state regulators have ordered many plans to cease offering coverage and be wound down.