The Nevada Health Co-Op that was created as part of the Affordable Care Act will soon shut down operations after struggling with the high costs and lackluster enrollment that’s plaguing most of the co-ops in other parts of the country.
The nonprofit’s board of directors announced Wednesday that they’d made the “painful” decision to phase out the program at the end of the year due to “challenging market conditions.” An audit recently released by federal officials showed the organization lost $15 million in 2014, and met half of its enrollment goal by the end of that year.
“Rather than spending resources on next year’s uncertain market, we would rather make sure we protect our current members,” said co-op member and Board Director Stacey Hatfield. “This is all about providing the most affordable, effective health insurance and service possible.”
Participants will be covered through the end of 2015 as long as they pay their premiums, but individuals are asked to choose other insurance providers when a three-month open enrollment period begins in November. Administrators of group plans can switch to new carriers at any time, according to the Nevada Division of Insurance.
Co-ops, a short name for Consumer Operated and Oriented Plans, are nonprofits designed to compete with corporate insurers, and were a compromise created when liberals failed to achieved their goal of a government-run insurance program. The organizations have received $2.4 billion in taxpayer loans for startup costs and to cover shortfalls.
But a recent government audit found only one of 23 — the co-op in Maine — made money last year. Thirteen have fallen far short of their enrollment projections, including Nevada, which reported 16,523 enrollees at the end of 2014.
“The low enrollments and net losses might limit the ability of some co-ops to repay startup and solvency loans, and to remain viable and sustainable,” said the report.
Co-ops in other parts of the country are now closing shop. Regulators shut down one covering Iowa and Nebraska, and a co-op in Louisiana announced plans to shut down.