Early Performance of ACA’s Health Insurance Cooperatives · 14/08/2014 · 0 5 10 15 20 25...

R u c h i t a P e n d s e M e n t o r : D r. S c o t t H a r r i n g t o n

Early Performance of ACA’s Health Insurance Cooperatives

August 14, 2014 SUMR Program Symposium

The ACA and the CO-OP Program

•  ACA sought to cut uninsured population

•  Health Insurance Exchanges

•  Lack of choice and competition in individual and small group

markets

•  Debate over public option

•  CO-OP: Consumer Operated and Oriented Plan

•  Non-profit companies

•  Governed by policy holders

•  New- not affiliated with existing insurance providers or any kind of

government body

Co-op Funding

•  Federal government has invested a lot in coops

•  Originally, $6 billion federal fund created

•  2012: Nearly $2 billion awarded to 24 new companies

•  2013: Only about $200 million uncommitted funds

survived cuts

•  Two types of loans

•  Startup loans: repaid within 5 years

•  Solvency grants: repaid within 15 years

Uncertainty about Co-op Success

• Vermont Health Co-op failed to get licensed

• CMS itself predicted over 35% default rate

•  Forced to set premiums without historical

claims data

•  What will happen to premiums in 2015?

Our Analysis

•  Find as much data as possible on these co-ops

•  Look at key indicators of financial health

•  Compare CO-OPs to other companies

•  Market share

•  Premiums

0 5 10 15 20 25

Meritus Mutual Health Partners (AZ)

Colorado Health Insurance Coopera=ve, Inc. (CO)

HealthyCT, Inc. (CT)

Land of Lincoln Mutual Health Insurance Company (IL)

CoOportunity Health (IA/NE)

Kentucky Health Coopera=ve, Inc. (KY)

Louisiana Health Coopera=ve Inc. (LA)

Maine Community Health Op=ons (ME)

Evergreen Health Coopera=ve Inc. (MD)

Minuteman Health, Inc. (MA)

Consumers Mutual Insurance of Michigan (MI)

Montana Health Coopera=ve (MT)

Nevada Health CO-‐OP (NV)

Freelancers CO-‐OP of New Jersey, Inc. (NJ)

New Mexico Health Connec=ons (NM)

Freelancers Health Service Corpora=on (NY)

Coordinated Health Mutual, Inc. (OH)

Freelancers CO-‐OP of Oregon, Inc. (OR)

Oregon's Health CO-‐OP (OR)

Consumers' Choice Health Insurance Company (SC)

Community Health Alliance Mutual Insurance Company (TN)

Arches Mutual Insurance Company (UT)

Common Ground Healthcare Coopera=ve (WI)

Millions of Dollars

Borrowed Money by Plan

Borrowed Money 2014 Q1

Borrowed Money 2013 Y

0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200%














Freelancers COOP of New Jersey, Inc. (NJ)




Freelancers COOP of Oregon, Inc. (OR)






Average

Money Owed/Assets

0% 200% 400% 600% 800% 1000% 1200% 1400%
























Combined Ra:o

Claim and CAE Ra=o

Expense Ra=o

0 20 40 60 80 100 120
























Enrollees (Thousands)

Expected vs. Actual Enrollment by Plan

Actual

Revised

Expected Enrollment

0% 20% 40% 60% 80% 100% 120%

AZ

CO

CT

IL

IA

NE

KY

LA

ME

MD

MA

MI

MT

NV

NJ

NM

NY

OH

OR

SC

TN

UT

WI

Total

Co-‐op Enrollment % of all Exchange Enrollees

-‐40%

-‐20%

0%

20%

40%

60%

80%

AZ CO CT IA IL KY LA MA MD ME MI MT NE NJ NM NV NY OH OR SC TN UT WI Total

Premiums of Co-‐Ops Rela:ve to Non-‐Coops by State

0

20

40

60

80

100

120

-‐40% -‐20% 0% 20% 40% 60% 80%

Percen

t of M

arketplace Plans Selected as Co-‐Ops

Rela:ve Premiums of Co-‐ops in State

Exchange Market Share by Rela:ve Premiums

-‐25.0%

-‐20.0%

-‐15.0%

-‐10.0%

-‐5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0 20 40 60 80 100 120

Prop

osed

2015 Ra

te Cha

nge %

Exchange Share %

Rate Change % vs. Exchange Share %

R² = 0.60

-‐25%

-‐20%

-‐15%

-‐10%

-‐5%

0%

5%

10%

15%

20%

-‐40% -‐20% 0% 20% 40% 60% 80%

Prop

osed

2015 Ra

te Cha

nge %

2014 Rela:ve Premium

2015 Rate Change % vs. Rela:ve Premiums %

Takeaways

•  CO-OP portion of ACA, how cooperatives work

•  Literature search

•  Finance and accounting terms and concepts

•  Data

•  Statistical analysis

Acknowledgements

•  Dr. Scott Harrington

•  Dr. Andy Coopersmith and Wharton Public Policy

Initiative

•  Joanne Levy and the SUMR Program

•  Leonard Davis Institute

Early Performance of ACA’s Health Insurance Cooperatives · 14/08/2014 · 0 5 10 15 20 25...

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