The Iowa insurance commissioner said on Friday he will seek the liquidation of CoOportunity Health, the West Des Moines-based insurer that had been one of two companies selling coverage in the Affordable Care Act's online marketplace in Iowa.
The Iowa Insurance Division said Commissioner Nick Gerhart had determined that rehabilitation of the company wasn't possible, noting "there is no expectation of cash flow until the second half of 2015 and medical claims currently exceed cash on hand."
The division said that it would file a petition next week and that it anticipates a hearing to occur in late February, with an order to liquidate to take effect at the end of February.
CoOportunity, one of co-ops across the country formed out of the passage of the federal Affordable Care Act to foster more competition, has received $146 million in funding from the federal government.
The company far surpassed its enrollment goals for 2014, signing up 120,000 members in Nebraska and Iowa.
On Christmas Eve, the insurance commissioner in Iowa got court permission to assume control of the company, saying it faced a perilous financial condition.
A court filing last year said that, in mid-December, the company had $17.2 million and it had lost $45.7 million from Jan. 1 to Oct. 31.
Since last month, the division has been encouraging people with CoOportunity policies to seek other coverage.
It did so again Friday, noting the open enrollment period on the exchange ends Feb. 15. The division said claims will continue to be paid. After liquidation, however, premium tax credits that help to lower the cost of insurance purchased on the exchange will stop.
CoOportunity was taken off the ACA exchange last month when the state seized control. That left just Coventry Heath Care of Iowa on the exchange.
How competitive the ACA marketplace in the state will be in the future is uncertain.
"The big question is whether Wellmark is going to be joining," said Peter Damiano, director of the Public Policy Center at the University of Iowa.
Wellmark, the dominant insurer in the state, has chosen so far not to sell coverage on the exchange. And because of decisions by the Obama administration and the state of Iowa in the wake of the controversy over people having their health care coverage dropped in other parts of the country, the company has been allowed to continue offering non-ACA compliant health plans to its Iowa customers.
Damiano said he thinks that was a factor in CoOportunity's trouble. People enrolled in Wellmark's non-compliant plans are believed to be younger and healthier, leaving a sicker pool of people to other insurers, such as CoOportunity.
"I think it was huge," Damiano said.
The insurance division, however, said the vast majority of CoOportunity's business was in Nebraska. And although Gerhart said Friday that he was sure the decision had an impact on CoOportunity, "it was a factor out of a list of a dozen or more."
The bigger factor, he said, was it grew too fast for its capital reserves.
CoOportunity, which had been highlighted in some national publications for its ability to exceed its enrollment projections, had sought help from the Obama administration late last year. But its request for funds were denied. The administration instead gave money to other co-ops.
Last week, Sen. Chuck Grassley, R-Iowa, began an inquiry into the matter, asking CoOportunity to retain certain documents. He also sent a letter to the Centers for Medicare & Medicaid Services, asking a series of questions about the decision to deny any more funds to the company as well as other matters.
In a statement Friday, Grassley said he is continuing to seek answers about the government's responsiveness to CoOportunity's requests for help. But he also raised questions over the administration's oversight of other cooperatives.
"The taxpayers have $2 billion invested in co-ops around the country," he said. "The taxpayers only get their investment back when the co-ops succeed."
An official with an organization representing state co-ops has previously said CoOportunity's troubles are not a reflection on the nature of the organizations themselves, only that they operate in unique markets across the country.
There are co-ops in about two dozen other states.