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Maine Health Insurance Cooperative Hits 'Pause Button' on New Members

LEWISTON, Maine — Community Health Options, health insurance cooperative based here that offers plans in both Maine and New Hampshire, has announced that as of Dec. 26, it will stop accepting new members for the coming year.

The announcement comes as the co-op confronts about an $18 million deficit for 2015. Community Health Options says the freeze on new members is to ensure its future viability, but it comes at a time when co-ops across the country have shuttered.

There are two factors that led to Community Health Options' decision to suspend enrollment in the online Marketplace about a month ahead of the Jan. 31 deadline. One, lots of new members, says CEO Kevin Lewis, and two, a marked increase in claims costs.

"Really has led us to say, 'OK, we're going to put our finger on the pause button, curtail additional enrollment for 2016, and then we'll see where we're at later in the year and then possibly reopen at that time,'" he says.

Community Health Options' members almost doubled from last year to this year: from 40,000 to about 76,000. The co-op has kept premiums in check, but as claims costs have risen, so has a deficit of about $18 million. Lewis says the co-op has enough capital to cover that deficit.

"Our action here really speaks to our ability to react in a way that preserves our integrity and viability into the future," he says.

The viability of health insurance co-ops in general has been called into question in recent months, as 12 of 23 have failed. Co-ops were formed under the Affordable Care Act as nonprofit alternatives to private insurance companies.

But this January, just one year after they first offered plans, rating agency A.M. Best found that 22 out of 23 had net financial losses. The only co-op that was doing well? Community Health Options.

Emily Brostek of Consumers for Affordable Health Care says this latest news is concerning, but says "I don't think it's a sign that they're in jeopardy. I think it's a sign that they're being careful."

Insurance is a tough business, says Brostek. In part because carriers must set insurance rates for the next year months in advance.

"So they can't really adjust, and that's a challenge for insurance companies, now that we have this new Marketplace and we have this new group of people — this new population that's signing up for coverage," she says. "It takes time to figure out how are people going to use this coverage and how plans need to be structured so the carriers that are offering them are financially viable."

Some co-ops that have closed their doors have blamed actions by Congress that chipped away funding intended to buoy them in their initial start-up years. Kevin Lewis of Community Health Options says they never relied on that federal funding. But Philip Caper, a retired physician and advocate for universal health care, says there are still other factors working against co-ops.

"Co-ops are going to have a tough time competing with a commercial insurance company," he says.

Caper says the current insurance system is too fragmented to ensure that everyone can access quality health care.

"If everybody's in the same program, everyone will have a motive to make sure that program works well," he says.

Community Health Options remains optimistic about the future. And the Maine Bureau of Insurance, which approved the temporary freeze on new individual members, says the co-op "continues to meet all of its obligations in the normal course of business."