It was a heck of a Christmas for David Fairchild and his wife, Clara Peterson. They found out they were about to lose their new health insurance.
鈥淐lara was listening to the news on Iowa Public Radio and that鈥檚 how we found out,鈥 Fairchild says. They went to their health plan鈥檚 website that night. 鈥淣o information. We still haven鈥檛 gotten a letter about it from them.鈥
The two are the sole employees of a cleaning service and work nights. Fairchild has chronic leukemia but treats it with expensive medicine. Last year they 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 says, they felt like they had room to breathe.
Married couple David Fairchild and Clara Peterson stand in the living room of the Story City home. They own a small cleaning business and were on Co-Opportunity Health before it faltered (Photo by Clay Masters/IPR)
鈥淏asically it covered our office visits; covered exams,鈥 he says. 鈥淚t covered all but $40 of the medicine every four weeks. It was just marvelous. It probably was too good to be true.鈥
It was for them. CoOportunity Health . The Affordable Care Act for health care co-ops, to enable the organizations to compete in places where there aren鈥檛 many insurers. CoOportunity Health was the co-op in the country in terms of membership, and one of the largest in terms of the g聽it received.
But then CoOportunity hit a kind of perfect storm, says , director of the University of Iowa鈥檚 public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.
鈥淐oOportunity Health鈥檚 pool of people was larger than expected, was sicker than expected,鈥 Damiano says. 鈥淪o their risk became much greater than the funds that were available,鈥
The reason the co-op鈥檚 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鈥檚 health exchange, leaving just CoOportunity and one other insurer 鈥 Coventry 鈥 offering plans on the exchange throughout the state.
On top of that, when the Obama administration in late 2013 allowed people to keep the insurance plan they already had, many customers happy with Wellmark stayed put. Damiano says this meant many of the customers who flocked to CoOportunity tended to be like Fairchild 鈥 people with expensive health problems who鈥檇 had trouble paying for insurance before, in the market Wellmark dominated.
鈥淚t was always going to be a challenging market to try to reach,鈥 says Damiano, 鈥渁nd on top of that, the whole idea of co-ops was relatively new and experimental. But it was to try to create competition, on that private sector approach,鈥 says Damiano.
Not only were the patients sicker, but CoOportunity鈥檚 leaders initially thought they would enroll 聽people in Iowa and Nebraska. They got about ten times that, according to , Iowa鈥檚 insurance commissioner.
Also, Gerhart says, the co-op thought it was going to get more federal money.
鈥淥n December 16 around 4 o鈥檆lock we were informed they weren鈥檛 going to get any further funding,鈥 he says. 鈥淣othing was pulled 鈥 it just wasn鈥檛 extended further.鈥
Gerhart is now essentially the CEO of the co-op because the state has taken it over. He likens the situation to a small business suddenly having its credit shut off by the bank. Even though CoOportunity is not officially dead yet, Gerhart is telling its customers to switch insurers.
Co-Opportunity Health is housed in West Des Moines, Iowa (Photo by Clay Masters/IPR).
He says it鈥檚 too early to make predictions about the fate for all co-ops.
鈥淥urs was the second largest in the country, so you鈥檝e got to look at it that way.鈥 Gerhart says. 鈥淚f the second largest can鈥檛 make it, how viable are the other ones? I don鈥檛 know. But at the end of the day they didn鈥檛 have enough capital to support 120,000 members.鈥
In a , Dr. Martin Hickey, chairman of the board of the National Alliance of State Health Co-Ops, said, 鈥淭he news about CoOportunity Health is not a statement on the health insurance co-op program or the co-op concept. It鈥檚 a reflection on the fact that all insurers 鈥 not just co-ops 鈥 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.鈥
But the co-op鈥檚 failure in Iowa has left David Fairchild and Clara Peterson scratching their heads.
鈥淚 mean the whole Affordable Care Act is [about] competition between insurance companies, and now we鈥檙e back down to what?鈥 says Peterson.
For them, only one option: Coventry. They鈥檝e already applied through healthcare.gov and now they鈥檙e now waiting for approval for a plan that will cover a lot less of Fairchild鈥檚 medicine expenses.
This story is part of a partnership between NPR and .