Not a Good Sign

One of the features of Obamacare is the not for profit co-ops that are supposed to find an alternative to for profit insurers.

Many of them have failed, and now what is arguably the most successful co-op, Maine's Community Health Options, has shut down individual enrollment:

Community Health Options, a not-for-profit co-op insurance company based in Maine that also sells health plans in New Hampshire, will limit individual enrollments later this month because of “higher-than-expected claims costs.”

It's an inauspicious sign for the company, which was one of the few successful co-ops created by the Affordable Care Act. Twelve of the ACA's 23 co-ops have folded or are in the process of closing down, all of which occurred this year.

Community Health Options is one of three insurers selling individual plans in Maine and one of five insurers in New Hampshire. Both states use the federal HealthCare.gov website for enrollment. The co-op will stop directly enrolling people in individual coverage on Dec. 15, and people who are signing up for its plans through HealthCare.gov will only have until Dec. 26, the co-op said on its website Wednesday.

The decision to halt enrollment early will not affect current members, and Community Health Options still plans on pursuing small employers into next year. “We aim to resume individual enrollment as soon as possible, but in the meantime continue to focus on group business,” CEO Kevin Lewis said in an e-mail Wednesday.

Community Health Options, which has 76,000 members, was one of the only ACA co-ops that didn't lose money out of the gate. Several of the failed co-ops—written into the ACA as an alternative to the so-called public option—lost millions of dollars due to costly claims. Many older and sicker members chose the co-ops during the first two open enrollments due to their low premiums, but they also used a lot of healthcare services, which crushed the co-ops and their limited financial reserves.

The co-ops were supposed to be two things, a weak tea alternative to a public option, and to provide some cost competition with the for profit insurers who dominate their respective markets.

They are failing, and the largest insurer in the US,  UnitedHealth is threatening to leave the exchanges completely.

We are not yet in an adverse selection death spiral, but this is troubling.