October 20, 2015

Federal Funding Shortfalls Push Some Affordable Care Act ‘Co-Ops' Over the Ledge, Mike Adelberg Tells The Hill

Co-op health insurers were instituted as part of the Affordable Care Act (ACA) and started with low-interest federal loans. Today, these "co-ops" operate in almost half of the states and serve more than a million people, but funding disappointments from reduced congressional funding and the ACA’s risk-adjustment and risk corridors programs have forced federal and state regulators to conclude that several of the co-ops are not financially viable. Eight of the 23 non-profit insurers will close at the end of the year. Mike Adelberg, senior director for FaegreBD Consulting, told The Hill their difficulties stem from a number of factors.

"Between reduced congressional appropriations and disappointments with respect to risk adjustment or risk corridors, it's a lot for any startup to overcome,” Adelberg said.

Adelberg added that the closures do not necessarily mean the end of the co-ops altogether.

"Co-ops run the continuum, many have now failed, on one end of the continuum, and some will make it, on the other end of the continuum,” he said.

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