As remaining CO-OPs struggle with enrollment, Maryland's start-up flourishes

Low enrollment continues to plague consumer operated an oriented plans (CO-OPs) with four of the remaining 11 insurance start-ups failing to enroll at least 25,000 members, according to a new report from the Government Accountability Office (GAO).

As of June 30, 2015, 22 CO-OPs enrolled more than one million beneficiaries, but more than half of those belonged to plans that folded at the end of the year. Six of the 11 failed CO-OPs didn't meet enrollment projections in 2015 even though average premiums for silver health plans were frequently lower in 2015 than the previous year, according to the GAO.

While CO-OPs around the country have struggled, Maryland's CO-OP has emerged as a rare beacon of stability, according to Healthcare Dive. Earlier this month, Evergreen Health announced that it recorded a net loss of $10.8 million in 2015, but the start-up had more than tripled its enrollment from 2014, bringing in an additional $71 million in premiums.

Evergreen CEO Peter Beilenson says his company was not hit as hard by the rush of medically needy individual enrollees that hit the market in 2014 because less than one-third of the business is devoted to individual plans. The majority of the business model relies on small group and large group plans, both of which feature young, relatively healthy enrollees. In 2016, Evergreen plans to offer better preventive care for chronic conditions like diabetes by eliminating co-pays and out of pocket costs for glucose strips, insulin and routine wellness visits.

Beilenson reiterated that the biggest obstacle for growth for small insurers is the risk-adjustment program. As FierceHealthPayer previously reported, smaller insurers, including CO-OPs, are often saddled with large risk-adjustment payments, while large established payers benefit from the program.

Evergreen is 30 percent ahead of individual enrollment goals for 2016, which should lay the groundwork for profitability. That doesn't mean the insurer is out of the woods yet. Other CO-OPs, like Maine's Community Health Options, showed promise in 2014, and then faltered in 2015 thanks to high medical costs, prescription drug costs and soaring business expenses.

To learn more:
- here's the GAO report
- read the Healthcare Dive article
- here's the Evergreen announcement