Maine CO-OP, once model for success, losing millions

Maine's Community Health Options lost more than $17 million in the first nine months of this year, after making $10.9 million in the same period last year, according to the Associated Press. Yet it is the only one of the remaining 11 consumer operated and oriented plans (CO-OPs) that is considered profitable.

In 2014, Maine Community Health Options enrolled 40,000 people, maintained rates lower than its big name competitors and offered unique benefits with a wide range of networked doctors. The CO-OP attributed its success to focusing on internal operations and offering a broad network, but higher-than-expected medical costs have hurt the insurer, the article said. The CO-OP recently announced it will will not accept new individual members after the current enrollment period ends later this month.

On average, 10 of the 11 remaining CO-OPs lost more than $21 million, ranging from $3.9 million to more than $50 million, according to the AP. 

At the root of the CO-OP failures are soaring medical and prescription drug costs combined with the high cost of building a network of care providers, negotiating rates with them and then marketing their plans to customers.

At the end of 2014, big insurers feared that CO-OPs would have an unfair competitive advantage in the market, because they received millions in federal funding to operate their business. But while some big-name carriers such as UnitedHealth are struggling in the ACA marketplaces, Anthem and Medicaid coverage provider Molina Healthcare, among others have said they are doing fine in their exchange business.

Robert Laszewski, a healthcare consultant and former insurance executive, expressed concern about the remaining CO-OPs, telling the AP they are "clearly in dire circumstances" and that he didn't "know how any of them can survive another year."

To learn more:
- here's the article