NATIONAL FAILURE: OBAMACARE CO-OPS ACROSS THE COUNTRY..........................3Health Care Co-Ops Across The Country Have Failed...................................................3

“More Than Half Of The Nonprofit Health Insurance Co-Ops” From ObamaCare Have Failed, Meaning They Are “Off The Market For The Coming Year”..................3The Co-Op Collapses Will “Disrupt Insurance” For Hundreds Of Thousands Of Individuals And Small-Businesses And Could Also Result In Fewer Choices And Higher Prices...............................................................................................................3The Co-Ops Received Over $2 Billion In Federal Loans..............................................3

States Where Co-Ops Have Failed..................................................................................4Arizona.........................................................................................................................4Colorado.......................................................................................................................4Iowa And Nebraska......................................................................................................4Kentucky And West Virginia........................................................................................4Louisiana......................................................................................................................5Michigan......................................................................................................................5Nevada.........................................................................................................................5South Carolina.............................................................................................................6Tennessee....................................................................................................................6Utah.............................................................................................................................6Vermont.......................................................................................................................6

The Co-Ops Were Built With Bad Policy: Enrollment Problems, A Broken Pricing Model, And A Lack Of Resources....................................................................................6

The Centers For Medicare And Medicaid Services Touted The Application Process As Assurance The Co-Ops Would Be Successful..........................................................7The COO Of Centers For Medicare And Medicaid Services (CMS) Said The Co-Ops Were Competing With Larger, Experienced Insurers.................................................7Commissioners And Leadership From Co-Ops In Different States Cited A Lack Of Resources For Co-Ops Compared To Large Insurers As Contributing To Failure......7A Short Timeline Also Contributed To At Least One Co-Op’s Failure.........................8The Co-Op In Tennessee Experienced Enrollment Problems And Had A Broken Pricing Model...............................................................................................................8

NATIONAL FAILURE: OBAMACARE CO-OPS ACROSS THE COUNTRY

Health Care Co-Ops Across The Country Have Failed“More Than Half Of The Nonprofit Health Insurance Co-Ops” From ObamaCare Have Failed, Meaning They Are “Off The Market For The Coming Year”

More Than Half Of The Co-Ops, 12 Out Of The 23 That Opened In 2014, Are Off The Market For 2016. “More than half of the nonprofit health insurance co-ops formed through the Affordable Care Act are now off the market for the coming year, with the last-minute departure of a plan in Michigan. On Tuesday, two days after the start of the new enrollment season in insurance exchanges created under the health-care law, the Web site of Michigan’s Consumers Mutual Insurance posted notice that it will not sell coverage for 2016. That co-op becomes the 12th plan to fail in the past year — and the ninth this fall — out of the 23 that opened at the start of 2014. The plans have offered an alternative, consumer-oriented type of coverage that the ACA envisioned as competition for traditional health insurers.” (Amy Goldstein, “More Than Half Of ACA Co-Ops Now Out Of Insurance Marketplaces,” The Washington Post, 11/3/15)

The Downfall Of The Co-Ops “Goes Directly Against A Fundamental Goal Of The Health Law: Lowering Insurance Costs While Offering Consumers More Choices.” “Of the 23 operating co-ops, 11 have recently folded or said they would close. One other never got off the ground. The downfall of these startups goes directly against a fundamental goal of the health law: lowering insurance costs while offering consumers more choices. The situation is compounded by the recent wave of mergers by commercial insurers, which could lead to even less competition.” (Stephanie Armour, “Health Co-Ops’ Failures Spur Finger-Pointing,” The Wall Street Journal, 11/4/15)

The Co-Op Closures “Amounts To What Could Be A Loss Of Nearly $1 Billion In Federal Loans.” “The shuttering of these start-ups amounts to what could be a loss of nearly $1 billion in federal loans provided to help them get started. And the cascading series of failures has also led to skepticism about the Obama administration’s commitment to this venture.” (Reed Abelson And Abby Goodnough, “Health Care Co-Op Closings Narrow Consumers’ Choices,” The New York Times, 10/25/15)

The Co-Op Collapses Will “Disrupt Insurance” For Hundreds Of Thousands Of Individuals And Small-Businesses And Could Also Result In Fewer Choices And Higher Prices

The New York Times Headline: “Health Care Co-Op Closings Narrow Consumers’ Choices.” (Reed Abelson And Abby Goodnough, “Health Care Co-op Closing Narrow Consumers’’ Choices,” The New York Times, 10/25/15) The Co-Op Collapses “Will Disrupt Insurance For 740,000 Individuals And Small-Business Employees.” “The dozen collapses will disrupt insurance for 740,000 individuals and small-business employees, who are being instructed by state and federal officials to choose new plans in time for them to take effect in January.” (Amy Goldstein, “More Than Half Of ACA Co-Ops Now Out Of Insurance Marketplaces,” The Washington Post, 11/3/15)

“The Vanishing Co-Ops Will Leave Some Consumers With Fewer Choices – And Potentially Higher Prices.” “At a time when the industry is experiencing a wave of

consolidation, with giants like Anthem and Aetna planning to buy their smaller rivals, the vanishing co-ops will leave some consumers with fewer choices — and potentially higher prices.” (Reed Abelson And Abby Goodnough, “Health Care Co-Op Closings Narrow Consumers’ Choices,” The New York Times, 10/25/15)

The Co-Ops Received Over $2 Billion In Federal Loans

“The 23 Co-Ops Have Received $2.4 Billion In Federal Loans To Help Pay Start-Up Costs And To Meet State Solvency Requirements.” (Robert Pear, “Failed Co-Ops Add Ammunition To G.O.P. War On Health Law,” The New York Times, 11/3/15)

States Where Co-Ops Have Failed

Arizona

On October 30, 2015, The Arizona Department Of Insurance Suspended The Co-Op (Meritus Health Partners) From Selling Or Renewing Policies Because Of Concerns The Co-Op Could Fail. “The Department of Insurance suspended Meritus from selling or renewing policies on Friday because of concerns it could fail, according to orders issued Friday. Meritus disagrees and says it has enough money to continue operations at least through 2016.” (“Health Insurance Co-Op Order Means 59,000 In Arizona Must Find New Coverage,” The Associated Press, 11/2/15)

About 59,000 Arizonans Who Purchased Insurance From The Co-Op Will Need New Insurance Plans. “About a third of the Arizonans who bought health insurance on the federal marketplace for 2015 will have to find a new provider following action by state insurance regulators to suspend the state’s nonprofit insurance co-op’s ability to sell new policies over concerns it could fail. The suspension of Meritus Health Partners means about 59,000 people will need new insurance unless the order is lifted. More than 50,000 of those people bought their plans through the marketplace.” (“Health Insurance Co-Op Order Means 59,000 In Arizona Must Find New Coverage,” The Associated Press, 11/2/15)

The Arizona Co-Op Lost $22 Million From January 1 Through September 31, 2015. “The orders show the two Meritus groups, a PPO and an HMO, lost a combined $22 million from Jan. 1 through Sept. 31 and if the losses continued it would eventually become insolvent. Meritus is spending about $2 million a month more than it currently takes in from premiums, chief operating officer Jim Walsh said in an interview Monday. But that loss was part of the startup nonprofit’s business plan as it gains business and the firm has $30 million on hand — enough to keep operating through 2016 if the company doesn’t see improving profitability as it expects. The company cut staff in August to save $12 million a year and increased premiums for 2016 at the request of the Department of Insurance.” (“Health Insurance Co-Op Order Means 59,000 In Arizona Must Find New Coverage,” The Associated Press, 11/2/15)

Colorado

In October 2015, Colorado’s Largest Co-Op (Colorado HealthOP) Announced That It Would Close, Forcing Over 80,000 Coloradans To Find A New Insurer In 2016. “Colorado’s biggest nonprofit health insurer announced its closure Friday, forcing nearly 83,000 Coloradans to find a new insurer for 2016. Colorado HealthOP announced Friday that the state Division of Insurance has de-certified it as an eligible insurance company.” (Kristen Wyatt, "Largest Health Insurer On Colorado Exchange Collapses," The Associated Press, 10/16/15)

Iowa And Nebraska

Iowa And Nebraska’s Co-Op Folded In February 2015, Becoming “The First Plan To Collapse.” “The first plan to collapse served people in Iowa and Nebraska; it folded in February after being taken over by state insurance regulators.” (Amy Goldstein, “Financial Health Shaky At Many ObamaCare Insurance Co-Ops,” The Washington Post, 10/10/15)

The Co-Op Covered Nearly 120,000 People In Iowa And Nebraska. “CoOportunity, which was one of 23 such health insurance cooperatives nationally, covered a total of nearly 120,000 people in Iowa and Nebraska before hitting financial shoals late last year. Iowa Insurance Commissioner Nick Gerhart took over the faltering carrier in late December.” (Tony Leys, “CoOportunity Health To Be Liquidated,” The Des Moines Register, 1/24/15)

Kentucky And West Virginia

In Nearly Half Of Kentucky Counties, The Kentucky Health Cooperative Would Have Been The Third Insurer To Provide Plans, But Now There Will Only Be Two Choices. “In Kentucky, where Kentucky Health Cooperative offered plans statewide and had 55,000 members this year, it would have been the third insurer offering plans in 59 of 120 counties for 2016, said Glenn Jennings, the co-op’s interim chief executive. Now people in those counties, which are mostly rural, will have just two choices.” (Reed Abelson And Abby Goodnough, “Health Care Co-op Closing Narrow Consumers’’ Choices,” The New York Times, 10/25/15)

“About 56,000 Kentucky And West Virginia Customers Are Now Scrambling To Find New Insurance Companies By Jan. 1.” (Richard Pollock, “Another Obamacare Co-Op Bites The Dust,” The Daily Caller, 10/14/15)

Louisiana

The Advocate Headline: “Louisiana Health Cooperative Discontinuing Insurance Operations After Being Created With Federal Funds Under Obamacare.” (Timothy Boone, “Louisiana Health Cooperative Discontinuing Insurance Operations After Being Created With Federal Funds Under Obamacare,” The Advocate, 7/24/15)

The Louisiana Health Co-Op, Which Was Created With $65.8 Million Of Federal Funds Will Not Offer Coverage In 2016. “Louisiana Health Cooperative Inc., a nonprofit health insurer created with a $65.8 million federal loan under the health care law is winding down its operations at the end of the year and will not offer coverage in 2016.” (Timothy Boone, “Louisiana Health Cooperative Discontinuing Insurance Operations After Being Created With Federal Funds Under Obamacare,” The Advocate, 7/24/15)

“Enrollment In The Louisiana Co-Op Fell Short Of Expectations. In 2014, Its First Year In Business, The Co-Op Signed Up 7,773 Members But Expected To Enroll 28,106. This Year, The Co-Op’s Two Plans Signed Up Just Shy Of 14,500 Members.” (Timothy Boone, “Louisiana Health Cooperative Discontinuing Insurance Operations After Being Created With Federal Funds Under Obamacare,” The Advocate, 7/24/15)

Michigan

In November 2015, Michigan’s Co-Op, Michigan’s Consumers Mutual Insurance, “Posted Notice That It Will Not Sell Coverage For 2016.” “More than half of the nonprofit health insurance co-ops formed through the Affordable Care Act are now off the market for the coming year, with the last-minute departure of a plan in Michigan. On Tuesday, two days after the start of the new enrollment season in insurance exchanges created under the health-care law, the Web site of Michigan’s Consumers Mutual Insurance posted notice that it will not sell coverage for 2016.” (Amy Goldstein, “More Than Half Of ACA Co-Ops Now Out Of Insurance Marketplaces,” The Washington Post, 11/3/15)

The Michigan Co-Op Had 28,000 Members. “It appears that East Lansing-based Consumers Mutual Insurance of Michigan could wind down operations this year as it is not participating in the state health insurance exchange for 2016. … Consumers Mutual CEO Dennis Litos said: ‘We are reviewing our situation (financial condition) with DIFS and should conclude on a future direction this week.’ While Eich said he could not disclose the options, he said one is ‘winding down’ the company, which has 28,000 members, including about 6,000 on the exchange.” (Jay Greene, “Consumers Mutual Co-Op Could Wind Down Operations,” Crain’s Detroit Business, 11/2/15)

Nevada

Nevada Health Co-Op, Once Considered A “Top-Tier” Co-Op, Folded Despite Having Been “Regarded As Best Poised To Succeed” By Federal Officials. “Amid this increased monitoring, one co-op has folded, stranding its members, and four others are preparing to close in late December. They include the Nevada Health Co-Op, which was initially among a top tier that federal officials had regarded as best poised to succeed.” (Amy Goldstein, “Financial Health Shaky At Many ObamaCare Insurance Co-Ops,” The Washington Post, 10/10/15)

The Las Vegas Sun Headline: “Nevada Health Co-Op To Close, Leaving Thousands To Find New Insurance” (Jackie Valley, “Nevada Health Co-Op To Close, Leaving Thousands To Find New Insurance,” The Las Vegas Sun, 8/26/15)

New York New York’s Co-Op, Health Republic Insurance Of New York, The Largest In The Country, “Toppled” In September. “Then late last month in New York state, the nation’s largest co-op toppled, startling insurance industry and health policy analysts who thought it was too big for the government to let fail.” (Amy Goldstein, “Financial Health Shaky At Many ObamaCare Insurance Co-Ops,” The Washington Post, 10/10/15)

The 200,000 Co-Op Members Only Had Two Weeks To Select Different Coverage. “The dozen collapses will disrupt insurance for 740,000 individuals and small-business employees, who are being instructed by state and federal officials to choose new plans in time for them to take effect in January. In New York state, the window is narrower. Government officials have moved up the closing date of the New York Health Republic co-op, the nation’s largest, giving its more than 200,000 members just two weeks to select different coverage before it shuts down at the end of this month.” (Amy Goldstein, “More Than Half Of ACA Co-Ops Now Out Of Insurance Marketplaces,” The Washington Post, 11/3/15)

South Carolina

“Late Last Week, South Carolina’s Co-Op Became The Ninth To Fail, Following Similar Crashes In Iowa, Louisiana, Nebraska And New York.” (Paul Demko, “GOP Seizes On Collapse Of Obamacare Co-Ops,” Politico, 10/26/15)

Tennessee

“Tens Of Thousands Of Tennesseans Are Being Forced To New Health Insurance Plans After One Of The State's Healthcare Cooperatives Announced It's Going Out Of Business.” (Jennifer Kraus, “Tennessee Healthcare Insurance Co-Op Going Out Of Business,” NewChannel5 Nashville, 10/14/15)

Utah

The Utah Co-Op, Arches Health Plan, Will Be Ordered Out Of The Insurance Market For 2016. “Arches Health Plan, the membership co-op created with federal

Obamacare money, has been ordered out of the individual insurance market for 2016.” (Kristen Moulton, “Utah Shuts Down Arches, Utah’s Nonprofit Insurance Co-op,” The Salt Lake Tribune, 10/27/15)

“Arches Insures 63,500 People In Utah, And Has The Second Highest Number Of Clients On The Federal Exchange.” (Kristen Moulton, “Utah Shuts Down Arches, Utah’s Nonprofit Insurance Co-op,” The Salt Lake Tribune, 10/27/15)

20 Utah Counties Will Be Left With Only One Health Care Choice Following The Failure Of Arches Health Plan. “The nonprofit co-op's failure has big implications for rural Utah. In 20 counties, Arches' departure leaves consumers with just one insurer offering plans on the exchange: SelectHealth, owned by Intermountain Healthcare.” (Kristen Moulton, “Utah Shuts Down Arches, Utah’s Nonprofit Insurance Co-op,” The Salt Lake Tribune, 10/27/15)

Arches Received $90 Million In Federal Money In Launching The Co-Op. “Arches was one of more than two dozen co-ops created by Obamacare. It got $90 million in federal money to launch.” (Kristen Moulton, “Utah Shuts Down Arches, Utah’s Nonprofit Insurance Co-op,” The Salt Lake Tribune, 10/27/15)

Vermont

The Commissioner Of The Vermont Department Of Financial Regulation Announced The Vermont Health Co-Op “Failed To Meet Vermont’s Insurance Standards” And Was “Denied A License To Sell Health Insurance In Vermont.” “Susan L. Donegan, commissioner of the Vermont Department of Financial Regulation, announced today that the Vermont Health CO-OP has failed to meet Vermont’s insurance standards and has been denied a license to sell health insurance in Vermont. The Vermont Health CO-OP (consumer operated and oriented plan) is a non-profit organization funded by loans from the federal government, which submitted an application to be licensed as a mutual member-owned health insurance company.” (Vermont Department Of Financial Regulation, “Vermont Health CO-OP Fails State Insurance Standards,” Press Release, 5/22/13)

The Co-Ops Were Built With Bad Policy: Enrollment Problems, A Broken Pricing Model, And A Lack Of Resources

The Centers For Medicare And Medicaid Services Touted The Application Process As Assurance The Co-Ops Would Be Successful

The Obama Administration Said “It Ran A Rigorous Screening Process” Of Co-Ops Applications, “Sifting Through Nearly 150 Applicants.” “After congressional Democrats were unable to pass a government plan to compete against insurers, the fallback option became nonprofit co-ops. The administration says it ran a rigorous screening process, sifting through nearly 150 applicants.” (Ricardo Alonso-Zaldivar “Obama Administration Defends Troubled Health Care Co-Ops As More Than Half To Close,” The Associated Press, 11/3/15)

According To The CMS, The Co-Ops Would Be Financially Viable Because Of The “Thorough Application Review Process And Extensive Loan Negotiations.”

(Centers For Medicare And Medicaid Services, Accessed 11/17/15)

The COO Of Centers For Medicare And Medicaid Services (CMS) Said The Co- Ops Were Competing With Larger, Experienced Insurers

Mandy Cohen, COO Of Centers For Medicare And Medicaid Services (CMS), Said That Co-Ops Faced Competition From Larger, Experienced Insurers. COHEN: “New entrants to any market, especially the insurance market, can face pressures, particularly in early stages. CO-OPs entered the health insurance market with a number of challenges, including building a provider network and customer support, no previous claims experience on which to base pricing, and competition from larger, experienced issuers.” (Ways And Means Committee, U.S. House, 11/3/15)

Commissioners And Leadership From Co-Ops In Different States Cited A Lack Of Resources For Co-Ops Compared To Large Insurers As Contributing To Failure

Tennessee Insurance Commissioner McPeak Blamed A Lack Of Resources Available To The Co-Op Compared To Other, Large Insurers For The Co-Op’s Failure. MCPEAK: “That's our experience in Tennessee. We didn't have any company accurately project the claims costs that were going to be coming from these enhanced benefit plans that were sold in the State and mandated under the Affordable Care Act. And so some of our larger established companies could withstand those companies and offer plans, but the CO-OPs just didn't have those resources available.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

John Morrison, Vice Chair Of The Montana Health Co-Op, Argued That All The Insurers In The Exchange Were Losing Money, But Because The Co-Ops Were New, They Could Not Offset Their Losses. “I don't mean to suggest that there were no mistakes made by management in CO-OPs, but if you look across the marketplace, what you see is that this was a very competitive marketplace, and insurance companies all priced aggressively. Everybody lost money. The difference was that co-ops were new entrants. They did not have other business and surplus to be able to offset the losses, and their capital was continuously reduced and capped.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

Morrison Said That The Co-Ops Did Not Have Adequate Capital To Deal With The Risks They Were Put Into. MORRISON: “To my knowledge, there have never been the situation where 22 new health insurance companies entered the health insurance market across the country in the same year, 2 years after they chartered their business. And so that was certainly a challenging situation. But it was much

more challenging, and indeed, fatal for some, because they did not have adequate capital to deal with the risks that they were put into.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

Louisiana Insurance Commissioner James Donelon: “In Hindsight, I Have Analogized It To Being Similar To Learning How To Sail In A Hurricane.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

Montana Health Co-Op Vice Chair John Morrison: “So When Commissioner Donelon Talks About Learning To Sail In A Hurricane, That's Especially Apt In A Situation Where We Were Prohibited From Building A Big Boat…” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

A Short Timeline Also Contributed To At Least One Co-Op’s Failure

Louisiana Insurance Commissioner James Donelon Blamed The Failure Of The Louisiana Co-Op On The Requirements Of Obamacare And The Short Timeline They Had To Become Operational. DONELON: “In the several months between their approval and the beginning of their doing business, they had the challenges of the issues presented by guaranty issue, no lifetime limits, age caps, et cetera, not to mention the need for them to go out and rent a network of providers in a not very friendly to a purchaser of such service environment. They had to hire a TPA to do claims, to do their premium collection and payments on. They had to build a marketing network of agents, all of that in a relatively short, 5-month period of time that, frankly, in hindsight, was not functional.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

The Co-Op In Tennessee Experienced Enrollment Problems And Had A Broken Pricing Model

According To Tennessee Insurance Commissioner Julie McPeak, The Co-Op In Tennessee Had “Minimal” Membership In 2014 Due To Having Plans Priced Above The Federally Facilitated Marketplace Leader. MCPEAK: “The company achieved minimal membership in 2014 due in large part to having plans priced significantly above the FFM leader and having limited network options.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

McPeak Blamed High Utilization, High Claim Costs, And Insufficient Premiums For The Co-Op’s Failure. MCPEAK: “So overcoming those challenges became extremely difficult, and that's why we saw significant rate increases for 2015 and beyond because of the enrollees across the market and Tennessee. We had higher than expected utilization, high claims costs, and insufficient premiums.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

The Tennessee Co-Op Had Planned To Sign Up 12,000 To 15,000 Enrollees In 2014, But Only Got 1,000. REP. BLACKBURN: “Okay. And let me go back to Dr. Murphy’s Questions. You were talking about the enrollment and it didn’t hit a thousand. What was the projected enrollment from the CO-OP, and what did CMS project that enrollment to be for 2016?” MCPEAK: “I would have to research the number, but I do believe that it was probably close to the 12- to 15,000 enrollee range for the first year growing to something more along the 20,000 enrollee range for 2015.” REP. BLACKBURN: “So their projection was 12-to 15,000 people, and what they actually got was about a thousand?” MCPEAK: “At its highest point.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

MCPEAK: “But Then In 2014, We Had Disastrously Low Enrollment.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)

MCPEAK: “Maybe 1,000 People Signed Up For The Co-Op Plan.” (Committee On Energy And Commerce, U.S. House, Hearing, 11/5/15)