Iowa/Nebraska CO-OP Insolvency Costs Taxpayers $225 Million
by Sean Parnell
March 20, 2015
After burning through $145.3 million in startup and emergency funding from federal taxpayers, Iowa-based Co-Opportunity Health will cost taxpayers at least another $80 million after being declared insolvent and taken over by the state, Iowa Insurance Commissioner Nick Gerhart announced in early March.
Co-Opportunity Health was one of 23 startup nonprofit insurers created thru the Affordable Care Act’s ‘Consumer Operated and Oriented Plans’ (CO-OP) program.
The CO-OP set its premiums too low in order to gain market share, says Devon Herrick, a senior fellow in health care policy at the National Center for Policy Analysis.
“They played ‘chicken’ with taxpayer dollars and expected taxpayers to bail them out,” Herrick said.
The Iowa and Nebraska Life and Health Insurance Guaranty Associations will pay more than $80 million in claims to doctors, hospitals, and other medical providers who haven’t been paid yet. Those two associations expect to be reimbursed by the federal government, according to a release from Gerhart’s office.