CO-OP closings contribute to for-profit plans' exchange losses

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The continued closings of consumer operated and oriented plans (CO-OPs) have made it more difficult for the remaining exchange insurers to turn a profit.

Over the last two years, CO-OP failures have dumped more than 800,000 former members back into the Affordable Care Act marketplaces, according to Bloomberg. The nonprofits had priced plans lower than private insurers that caused enrollment--and costs--to soar past projections, the article says. 

CO-OPs also seem to have attracted disproportionately high healthcare utilizers, JP Morgan insurance analyst Gary Taylor told Bloomberg. Members migrating to plans offered by private insurers contributed to payers’ profitability issues. 

Indeed, major insurers such as UnitedHealth, Humana and Aetna have all reduced their ACA exchange presence for 2017, citing financial losses. These exits deepened concerns about the exchanges’ future, motivating left-leaning lawmakers to support a public insurance option. Senate Republicans have introduced legislation allowing individuals to use government subsidies to buy health insurance outside of the exchanges.

For its part, the Obama administration has responded with a set of policy proposals aimed at addressing insurers’ concerns about the exchange markets, suggesting tighter open enrollment period rules and allowing for more creative plan design.

Anthem, meanwhile, estimated it will take some $300 million in losses on its individual exchange business this year, the Bloomberg article notes. Chief Financial Officer Wayne DeVeydt said in April that the insurer was “disproportionately picking up market share” in states where CO-OPs failed, the article adds.

Still, CEO Joseph Swedish has said that Anthem--currently one of the largest players in the ACA marketplaces--would consider expanding its exchange presence if it is allowed to acquire Cigna.

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