Iowa, Nebraska Officials Seek to Close Insurance Co-Op

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Iowa’s top insurance official announced plans to ask a court to end a cooperative that was selling health insurance to residents in Iowa and Nebraska – a move that will limit options for consumers in both states.

Iowa Insurance Commissioner Nick Gerhart said he would seek the liquidation of CoOportunity Health’s assets. He expects the process to be complete by late February, The Des Moines Register reported.

Gerhart said he chose liquidation after determining the cooperative’s medical claims would exceed its cash on hand. He said special insurance-guarantee funds will pay outstanding claims, but he recommended people find other health insurance coverage by March 1 or earlier. The deadline for open enrollment for 2015 coverage in Feb. 15.

“Our No. 1 priority is to the Iowans and Nebraskans impacted by this event,” Gerhart said in a statement. “We want to ensure a seamless transition as possible to other coverage and avoid any gaps in coverage.”

West Des Moines-based CoOportunity was a federally funded nonprofit created under the Affordable Care Act that was aimed at providing more health care options in Iowa and Nebraska. State regulators took over CoOportunity late last year after the organization’s available funds depleted.

Martin Hickey, chairman of the National Alliance of State Health Co-Ops, said the carrier lost money by participating in a plan that used federal Medicaid money to buy private policies for moderate-income Iowa residents who were relatively unhealthy.

“I think they were exposed to an inordinate amount of risk in that population,” said Hickey, who also leads New Mexico’s health insurance cooperative.

Gerhart said CoOportunity hit a cash flow crunch after a provision adopted by Congress reduced its assets.

CoOportunity insures about 120,000 people in Iowa and Nebraska.