Iowa’s insurance commissioner says it’s too early to make predictions about the fate of health co-ops set up under the Affordable Care Act, but thousands of Iowans are scrambling to find a new insurer after one of those co-ops essentially collapsed last month. Nick Gerhart was recently assigned management of the nonprofit insurance provider CoOportunity. The leaders of CoOportunity initially thought they would enroll about 12,000 people in Iowa and Nebraska, but they got about ten times that, according to Gerhart.

David Fairchild and Clara Peterson own a small cleaning business in Iowa. The couple had health insurance via CoOportunity Health before the co-op faltered.

“Ours was the second largest (health co-op) in the country, so you’ve got to look at it that way.” Gerhart says. “If the second largest can’t make it, how viable are the other ones? I don’t know. But at the end of the day they didn’t have enough capital to support 120,000 members.” CoOportunity hit a kind of perfect storm, according to Peter Damiano, director of the University of Iowa’s public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.

“CoOportunity Health’s pool of people was larger than expected and was sicker than expected,” Damiano says. “So their risk became much greater than the funds that were available.” The reason the co-op’s customers were sicker has a lot to do with what the insurance market looked like in Iowa before Obamacare.

The largest insurer by far in the state was and still is Wellmark. But Wellmark decided not to offer any plans on Iowa’s health exchange, leaving just CoOportunity and one other insurer – Coventry – offering plans on the exchange throughout the state. Gerhart says, the co-op thought it was going to get more federal money, but learned on December 16 that financing wasn’t being extended. Gerhart says even though CoOportunity is not officially dead yet, customers should switch insurers.

David Fairchild and his wife, Clara Peterson, own a small cleaning business in Ames. David has chronic leukemia but treats it with expensive medicine. Last year, the couple saved hundreds of dollars switching from the insurer Wellmark to a plan run by CoOportunity Health. For the first time in a long time, Fairchild said, they felt like they had room to breathe. “Basically it covered our office visits; covered exams, it covered all but $40 of the medicine every four weeks. It was just marvelous. It probably was too good to be true,” Fairchild said.

Fairchild and his wife have already applied through healthcare.gov to switch to Coventry. In a written statement, Dr. Martin Hickey, chairman of the board of the National Alliance of State Health Co-Ops, said, “The news about CoOportunity Health is not a statement on the health insurance co-op program or the co-op concept. It’s a reflection on the fact that all insurers – not just co-ops – are operating in unique markets with unique business plans and varying state regulations. The circumstances for CoOportunity Health in Iowa are not the same as those in the 23 other states in which co-ops are currently operating.”

(Radio Iowa/Iowa Public Radio)