Senator Cory Gardner last week sent a letter to Sylvia Burwell, secretary of the Department of Health and Human Services, “to inquire about the financial solvency of Colorado HealthOP and its ability to repay its federal loans.”
Gardner said his inquiry was due to the “recent failures” of health insurance cooperatives around the country, to include Louisiana Health Cooperative Inc., CoOportunity Health in Iowa and Nebraska and Nevada Health CO-OP. Gardner also stated, in his letter, that “financial statements from the first nine months of 2014 show that Colorado HealthOP has a net loss-to-surplus ratio that was more misaligned that CO-Ops that have recently been liquidated.”
According to Julia Hutchins, CEO of Colorado HealthOP, members of the cooperative have nothing to worry about.
“We’re really doing well this year. Really old numbers were quoted in [Gardner’s] letter,” Hutchins said. “We’re a Colorado small-business startup that has been outperforming predictions all year. We’ve grown from 14,000 to 80,000, and that was planned growth … and we’ve made a profit in the first quarter. Our second quarter statement showed a $4.6 million loss. But we’re projected to turn a profit in our third year of operations. That’s remarkable for any startup, especially one that’s in health insurance.”
There appeared to be some cause for concern however, as Colorado’s Insurance Commissioner, Marguerite Salazar, told a legislative oversight committee this summer that she would keep tabs on the co-op. She directed her financial experts to review the co-op’s finances on a monthly basis. Salazar required Colorado HealthOP to set up a multi-million dollar fund to cover potential future losses.
“Regarding the Colorado HealthOP, the Division of Insurance monitors the financial condition of the HealthOP, and it currently meets the state’s capital and surplus requirements,” according to Vincent Plymell, communications manager for Colorado’s Division of Insurance.
The co-op has affected the insurance landscape since it became operational following the implementation of the Affordable Care Act.
“The HealthOP shook up the market last year when managers cut rates dramatically across the state, thereby reducing tax subsidies for nearly everyone who bought insurance through the exchange,” Health News Colorado reported in an article published in June. “The HealthOP scooped up 40 percent of the exchange market for 2015, selling plans to more customers than any other health insurance company, including Kaiser Permanente and other established insurance giants. Some critics accused the HealthOP of intentionally pricing low to buy up market share.”
Regarding growth, Hutchins said the co-op has “done a great job in making sure, from an operations perspective, we’ve scaled up successfully. We’ve listened to members and brokers and made it easier for people to use insurance and have access to care. Startups always experience the unexpected, but we’ve done a good job of rolling with it, being fluid and nimble, and at the end of the day, deliver products to consumers and small businesses that keep cost down.”
Salazar had expressed concern, however, that the co-op’s rates would not be sufficient in covering potential claims. When asked if a rate increase was on the horizon, Hutchins played coy.
“We’ll be adjusting our rates, as any carrier does,” she said. “We’ll still be the low-cost carrier in Colorado.”