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CO-OPs and Integrated Health Care Delivery Systems Exiting Insurance Market

Posted by Laura McMullen on Wed, Dec 21, 2016

ACA.pngOne of the intended effects of the Affordable Care Act was to open up the insurance marketplace to new competitors. In 2015, we examined CO-OPs and integrated health care delivery systems to learn more about their business models and positioning. Both types of companies are leaving the market now without having reached the critical mass of members and premium needed to compete against the larger, more established insurance companies operating in their service areas.

Here are the stats on CO-OPs, according to healthinsurance.org:

  • 5 of the 23 CO-OPs that were originally chartered under the Affordable Care Act will be operational in 2017.
  • 2 of the remaining CO-OPs are working with outside investors to stay in business: New Mexico Health Connections is currently profitable and working with Raymond James, a NY investment firm, to raise a substantial amount of funding to continue operations and Evergreen Health in MD is working with private equity investors to transition from a non-profit CO-OP to a for-profit entity.
  • CO-OPs owe more than $130 million to the 2015 Affordable Care Act risk adjustment program that distributes payments from health insurers with lower-risk enrollees to health insurers with higher-risk enrollees. This program was created “to prevent insurers from designing plans that appeal only to healthy enrollees, and to ensure that premiums reflect benefit levels, rather than the overall health of a plan’s enrollees.”

Integrated health care delivery systems are winding down their operations too, as reported in the Denver Post.

  • Catholic Health Initiatives, Tenet Healthcare Corp., WellStar Health System (GA), and Piedmont Healthcare (GA) have all sold or shut down their insurance operations after steep losses.
  • High start-up costs to compete against well-established carriers and low membership contributed to their decisions.
  • Ascension Health (St. Louis) and Northwell Health (Great Neck, NY) remain in the insurance business.
  • “McKinsey & Co. said in a 2015 report that while hospital-owned insurers covered just 8% of the nation’s insured, 20 of those 107 insurers accounted for two-thirds of that total.”

How do these plan shut-downs affect your business? Are the providers in these networks already in your networks? Do you want to add them?

Tags: health insurance, Affordable Care Act, ACA, provider networks, health insurance co-ops

 

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