Colorado HealthOP Shuts Down, Leaving 83,000 Residents Without a Health Insurance Policy

Thousands of Coloradans were left stranded on Nov. 2 when the state’s health exchange lost its biggest insurer, Colorado HealthOP.

According to the Denver Post, Colorado HealthOP leaves 83,000 residents with no insurance coverage for the upcoming year, and it has left a trail of financial woes as well. Taxpayers will now have to foot the bill for $72 million, which is the debt incurred via federal loans to start up the Colorado co-op.

The Colorado Division of Insurance stated that HealthOP was dropped from the Colorado insurance exchange because it “no longer meets state capital-reserve requirements,” the Denver Post reported. It will continue to pay claims throughout 2015, but it cannot sell or renew policies for 2016.

Colorado isn’t the only state to see major nonprofit insurance co-ops fail; several other insurance providers in Kentucky, Louisiana, Iowa, Nebraska, Nevada, New York, and Tennessee have failed due to similar financial problems.

For Colorado HealthOP, the problem is rooted in a huge gap between how much money members paid into the insurance program in 2014, and how much money their claims were worth. Although members paid a collective $362 million into the program last year, their claims totaled $2.87 billion. The U.S. Centers for Medicare and Medicaid (CMS) said that insurers would be reimbursed 12.6% of what they were owed during 2014; HealthOP reportedly expected to receive around $16.2 million, and instead only received $2 million.

This left the insurer with no other option than to tap into its reserves, and it now cannot meet federal reserve requirements for the upcoming year.

The state’s health exchange stated that residents may be scrambling to find a new policy right now, but it’s highly likely that every resident will be able to find a new plan in the exchange in time for 2016. Open enrollment began on Nov. 1, and the exchange is hoping to bring in even more enrollees for 2016 by targeting certain ZIP codes and reminding people that the fine for neglecting to purchase a health insurance plan is rising to $695 per adult. As the Denver Post put it, the exchange wants Coloradans to “regard health insurance as a necessary protection — like auto insurance.”

Groups like ColoradoCareYES are taking it one step further and campaigning to create a taxpayer-funded healthcare plan for every resident. This would allow the state to opt out of the mandatory federal health plans, which many say are inadequate. Dental coverage, for example, is not considered mandatory — despite the fact that around 92% of adults, ages 20 to 64, have had at least one cavity, and getting this treated could easily cost hundreds of dollars.

For the time being, thousands of Coloradans must decide whether they’re willing to shop around for another policy in the exchange or to pay the $695 fee — and time is running out.