SALT LAKE CITY (AP) — A nonprofit Utah health insurer that received federal loans to get up and running lost nearly $20 million in its first year and is among co-ops around the country struggling with financial losses, according to a new audit.
The U.S. Health and Human Services inspector general’s office reported Thursday that all but one of the 23 co-ops around the country saw financial losses last year. A co-op in Maine was the exception.
Arches Mutual Insurance Co. in Utah is among those that lost money, reporting a $19.9 million loss for 2014.
The co-op insurers were created by President Barack Obama’s health care law and were awarded taxpayer-backed startup loans.
Arches received nearly $94 million.
Arches Chief Executive Officer Shaun Greene said Thursday that his company and most other insurers faced higher-than-expected costs when consumers signing up for the first year of coverage under the health care law were sicker and costlier than projected.
“It’s not simply just a co-op problem,” he said. “It’s an industry-wide problem.”
Greene said Arches expected to lose money in its first year, but the losses were about $10 million higher than expected.
To compensate for a more expensive group of patients, Arches is among many co-ops and traditional, for-profit insurers that plan to hike prices for health plans next year.
Greene also attributes the first-year losses to Utah’s decision not to insure more residents through the government-run Medicaid program and the steep costs of new prescription drugs. One of those is Sovaldi, a cure for hepatitis C infections that costs about $1,000 a pill.
Of the co-ops that lost money in 2014, about half of them saw far fewer people signing up than expected, bringing in less money through monthly premiums.
That wasn’t a problem in Utah, where Arches passed its enrollment goal by about 1,800 people.
They had 23,000 sign-ups last year, but Greene said Arches is on track to enroll about three times that by the end of 2015.
The co-op is hopeful that bump will help them break even this year.