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As consumers rush to enroll in the insurance exchanges, one change that's complicating signups is that more than half of the state-run health co-ops -- an alternative to private insurers -- were forced to shut down this year. The government was supposed to offset the costs, but Congress sharply curtailed that money. Special correspondent Mary Jo Brooks reports on the effects in Colorado.
But, first, the demand for health insurance and concerns over choice.
The federal government reported higher demand this year for people trying to enroll on insurance exchanges for coverage. Six million had signed up by last week for coverage that begins next month. More than two million of them were new customers.
But, in 11 states, there's one change that's complicating the picture this year: Half of the state-run health co-ops were forced to shut down.
Special correspondent Mary Jo Brooks looks at what happened in Colorado.
MARY JO BROOKS:
It's been a tough year for 36-year-old Jessica Peck, a Denver attorney and divorced mother of two. Peck suffers severe vascular and neurological ailments which over the years led to soaring medical bills.
In 2014, she signed up with a brand-new health insurance company called Colorado HealthOP.
The co-op provides health insurance that is built around all needs.
It was a nonprofit co-op formed under the Affordable Care Act and funded with loans from the federal government. Peck says she chose it because the price was right.
JESSICA PECK, Colorado HealthOP member: At least 50 percent in terms of premiums and out-of-pocket co-pays from the year before.
Fifty percent. So this cost saving was a difference. When I was at my sickest of being able to pay my bills, to be able to put gas in my car, and at one point having the difference in premiums was probably the only thing that kept me afloat.
At her sickest last year, Peck was forced to have her right leg amputated and was hospitalized for more than 23 days. Peck is the first to admit that the co-op wasn't perfect, including some billing errors she is still trying to sort out. But she was dismayed when she heard the news that the co-op was being shut down.
Now I have to go back into a marketplace of players that I have worked with before, the big, big guys out there, who hurt me before, who sent me to collections on bills, who denied care that was absolutely 100 percent essential. And I have to go back into that marketplace and pay twice as much as what I'm paying right now.
Colorado HealthOP was one of 23 co-ops started around the country as a concession to Democrats who wanted the ACA to include an alternative to private insurers.
Michele Lueck heads up the policy research group Colorado Health Institute.
MICHELE LUECK, Colorado Health Institute:
There were a number of politicians and legislators who wanted to have a government choice, something like Medicare that people could opt into.
And when that wasn't politically feasible, an olive branch essentially that was offered to the left was this idea of creating co-ops, that this would be something that was owned and operated by the people who needed it the most.
Offering some of the lowest-priced plans in the state, the co-op quickly became very popular. By 2015, it had 83,000 policy holders, which represented 40 percent of all policies sold on the Colorado health exchange.
Still, it was tough to compete against long-established companies. For one thing, most of the patients who signed up with the co-op had been previously uninsured, which meant they had greater needs.
CEO Julia Hutchins.
JULIA HUTCHINS, CEO, Colorado HealthOP:
People who signed up for health insurance in 2014 had a lot of pent-up demand. And it wasn't hospital care. These are procedures. When you're uninsured or underinsured for a long time and then have insurance, there is a lot of care that needs to be provided. So we spent more on claims in our first year than we projected.
The government was supposed to offset costs of those high-risk patients, but the Republican-led Congress sharply curtailed funding. In October, the administration announced it would only be able to pay 13 percent of the $3 billion it owed insurers across the country. Colorado HealthOP was counting on $40 million.
SCOTT LLOYD, Colorado Division of Insurance: And when that money did not come in, that's what really put them under.
Scott Lloyd with the Colorado Division of Insurance said without the federal money, the co-op didn't have enough capital on hand to be recertified.
If your capital drops to a certain point, it's called mandatory control level, so we're mandated as a state to take control of an entity when that capital drops below that. We can't wait around to see if it turns are going to around, because the longer you wait, the worse the situation could become.
When we heard the news, we — I really felt sick to my stomach.
In spite of the news, Hutchins was confident they could raise the needed money elsewhere. She had three interested investors, but didn't have the cash in hand to meet the insurance deadline. So at the end of the year, the co-op will shut down. Many of the 80 employees have already begun packing up the office.
It's unfortunate that we were part of a health care program that's been so politicized. We were orphaned by politics.
Who are you most angry at?
Because so many different ways that the administration made the Affordable Care Act work, but they really abandoned the co-op program at the time when it was most important.
In fact, more than half of the co-ops nationwide have announced they are shutting down. That has left members scrambling to find new policies for next year.
At health fairs like this one in Littleton, Colorado, insurance companies are trying to attract those members, but their higher-cost plans are a tough sell.
PATRICIA PUTNAM, Colorado HealthOP member: Everybody has these $6,000, $7,000 max out of pockets. And when you're on disability, you can't — you don't have $6,000, $7,000 to pay every year.
It is a compromise, isn't it?
It's not compromise for me, because I don't have that.
So, what could the co-ops have done differently? Michele Lueck says perhaps they shouldn't have relied so heavily on the government.
Other states, like Connecticut and New Jersey and Maine, didn't rely on that money. They thought that they had higher premiums to create the necessary reserves, but they didn't rely on this promised payment from the federal government. And those are the ones, by and large, that are still in existence today.
But Julia Hutchins says she's not sure anything could have helped.
It says something when you have a local company who was doing all the right things and was still able to offer the lowest cost and said to be profitable, and that we couldn't figure out how to navigate the powers that be in health insurance to survive.
It's important to recognize that this isn't just a co-op story. This is a small health plan story. And we really haven't seen any good solutions to reduce costs from the big health plans.
These have larger premiums.
Coloradans will get another chance to experiment with an alternative health insurance plan next November, when they vote on a ballot measure that would create a statewide single-payer insurance system.
In Denver, I'm Mary Jo Brooks for the PBS NewsHour.
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