28 Oct 2015
The Co-Op had been scrambling to find money to keep its doors open but, as reported by the Salt Lake Tribune, the Centers for Medicaid and Medicare Services (CMS) demanded the Insurance Department make a decision about the Co-Op’s future by Tuesday.
Approximate 35,000 Utahans were insured by Arches via the Obamacare exchange. Those individuals will have to seek new policies during the open enrollment period that begins next Monday. Arches will continue paying claims for its existing customers through the end of the year.
Arches’ collapse comes after CMS announced earlier this month that it would only be able to cover 12.6% of claims made by insurance companies under the risk corridors program. Risk corridors collected money from insurers who made unexpected profits and paid it out to those who had unexpected losses. But the program only took in $362 million and was asked to pay out $2.87 billion.
Tricia Schumann, Arches’ communications officer, told the Deseret News, “We stood to benefit by our calculations in excess of $30 million for those ‘risk corridor’ payments. We did anticipate those cash payments coming in … this quarter.”
Arhes is the 10th Obamacare Co-Op to fail so far this year out of 23, all of which were started with government loans. A South Carolina Co-Op, Consumers’ Choice, was shut down last week. In addition, Co-Ops in Colorado, Iowa/Nebraska, Louisiana, New York,Nevada, Tennessee, Oregon, and Kentucky have already closed this year.
An Inspector General’s report published this summer found that 22 of the 23 Co-Ops lost money in 2014. Nineteen had claims that exceeded premiums, and 13 of 23 were significantly behind their enrollment projections. Insurance industry expert Bob Laszewski has called the Co-Ops, “the canaries in the Obamacare coal mine.”Follow enlightenedlbrl