So far this year, a dozen health insurance cooperatives created by the 2010 federal Affordable Care Act have failed – but the co-op in Montana says it’s relatively healthy, and not in danger of closing.
“Will it survive? I think it will,” says Montana Health Cooperative CEO Jerry Dworak. “In fact, I’m confident it will.”
Montana’s co-op, which opened for business in late 2013, is one of 23 state-based co-ops created and financed by the law known as “Obamacare.” A dozen failed this year.
The co-ops are intended to be competitive, nonprofit alternatives in state health-insurance markets, selling subsidized individual policies on the online “marketplace” — also created by the new law.
The Montana co-op insured 22,000 Montanans this year and has also expanded into Idaho, where it insures another 20,000 people. In Montana, only Blue Cross and Blue Shield has sold more individual policies since 2013.
Yet the Montana co-op has still lost money: About $3 million in 2014 and a projected $40 million this year.
Three-fourths of this year’s losses are because the federal government welched on promised payments to offset co-op losses – after Congress undercut the funding.
“The co-ops that did the best are the ones who did not rely heavily on (this) payment,” said John Morrison, a Helena attorney and member of the board overseeing the co-op. “But the ones who relied on it, it did them in.
“In Montana, we’ve been very conservative. We’ve kept our overhead very low and we’ve made no assumptions about the federal government reliability when it comes to giving us additional funds.”
The Co-op, Blue Cross and PacificSource are the three health insurers selling policies on Montana’s online marketplace. All three have lost money – and all three raised their rates substantially for 2016 policies.
Dworak said with the price increases, the co-op has projected it will break even or be slightly profitable next year.
The co-op got started with $8 million from the federal government and another $78 million operating loan. Both are long-term loans the co-op doesn’t have to start paying back for several years yet.
Dworak said he expects Montana’s expanded Medicaid program will pick up about 4,000 of the co-op’s customers next year, but that’s not necessarily a bad thing. Many of those customers tend to be less healthy and more expensive to cover, he said.
Both Morrison and Dworak argued that co-ops have introduced more competition into the marketplace and ultimately saved consumers money. Dworak said without the co-op, Montana would have only two competitors selling on the online marketplace.
“Take a look at the premiums here versus Wyoming, where there is only one (competitor),” Dworak said. “I do think we’ve served the citizens of Montana very well.”
Date: December 8, 2015