Press Release - JANUARY 16, 2015

A.M. Best Briefing: Losses Persist at Majority Of Health Co-ops


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Sally Rosen
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Andrew Edelsberg
Vice President
(908) 439-2200, ext. 5182
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Christopher Sharkey
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(908) 439-2200, ext. 5159
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Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
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FOR IMMEDIATE RELEASE

OLDWICK - JANUARY 16, 2015
Total enrollment in the Consumer Operated and Oriented Plans (Co-ops) established under the Patient Protection and Affordable Care Act exceeded 500,000 as of Sept. 30, 2014. While the enrollment grew during the second and third quarters, it still is significantly lower than the eight million people who had enrolled in state and federal exchanges during the 2014 open enrollment, this according to the Best's Briefing titled, "Losses Persist at Majority Of Health Co-ops."

For the statutory results reported through the third quarter, only one Co-op, Maine Community Health Options, reported both favorable underwriting and net income at $10.9 million. All other Co-ops reported both underwriting and net losses. This is a deterioration from the first quarter of 2014, when two Co-ops reported positive earnings, one was break-even and the remainder reported losses on an underwriting and net basis.

Net losses through Sept. 30, 2014 ranged from $2.6 million for Montana Health Cooperative to a loss of $39.8 million at CoOportunity Health. The aggregated underwriting loss was $243.6 million at Sept. 30, compared with $72.3 million for the first quarter of 2014. The medical loss ratio was greater than or equal to 100 for more than 40% of the plans, and the administrative expense ratio exceeded 20 for all but three of the plans. Furthermore, the administrative expense ratio was significantly higher than 20 for more than half of the Co-ops. However, it should be noted that the Co-ops with the higher administrative expense ratios typically had low enrollment. In general, carriers with lack of scale tend to have higher administrative expense ratios. (All amounts in this report are USD.)

The Co-ops were established as a way for nonprofit health insurers to offer coverage and compete on health insurance exchanges. These carriers began offering coverage on Jan. 1, 2014 and participated in the open enrollment that ended on March 31, 2014. On Aug. 8, 2014, A.M. Best issued a briefing discussing the results of the Co-ops for the first quarter.

For the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=232698 .

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