Federal authorities have approved plans by the co-ops in Montana, Massachusetts and Kentucky to expand into neighboring states next year -- Idaho, New Hampshire and West Virginia, respectively. The companies have received a total of $113 million for their expansion plans, according to a government budget document published March 4.
For a handful of co-ops, success has raised a new concern. If they enroll many more customers than they expected, they could run afoul of state regulators who require companies to maintain cash reserves sufficient to cover medical claims in the event they go out of business. All the co-ops received multimillion dollar loans from the government to fund solvency reserves, and the size of each loan was based on projected enrollment.
The Iowa co-op, CoOportunity, which also serves Nebraska, has signed up about 54,000 members, after projecting it would enroll just 11,800 by the end of March, said Cliff Gold, the chief operations officer.
Solvency Loans
“We do have concerns about the solvency loans if we continue to grow at this rate,” Gold said. The co-op was signing up as many as 1,000 people a week in February, he said.
The co-ops have lobbied the U.S. Centers for Medicare and Medicaid Services, which controls the loans, to make more money available for reserves. Congress capped spending on the co-ops as part of a budget deal in January 2013, leaving $253 million in a “contingency fund for oversight and assistance” to the firms, according to another budget document published March 4.
“While it’s still early, we are encouraged by what we have seen so far, and we will continue to work closely with these co- ops to monitor their progress and assess their performance,” a spokesman for the agency, Aaron Albright, said in an e-mail.
If the co-ops continue to grow, Obama administration officials have promised to support them, Morrison said. Morrison and co-op executives met with U.S. Health Secretary Kathleen Sebelius and other top administration health officials at the White House on Feb. 6 to brief them on their progress.
The officials told the companies that “if co-ops continue to perform well in the years ahead, the administration will look to expand the availability of co-ops into the remaining states that don’t currently have them,” Morrison said.