Executives with Arizona’s nonprofit health cooperative announced late Tuesday night that they have failed to come up with additional financial backing and will close down all operations on December 3.
The closure of Meritus Health Partners marks the thirteenth failure of the co-ops established under the Affordable Care Act, and leaves 59,000 Arizonans without insurance. The company was responsible for insuring more than 30% of state residents who purchased and paid for individual policies on the federal marketplace.
Affected policyholders must find a new insurer by December 15 if they want coverage beginning January 1.
The decision to shutter the co-op comes nearly one month after the Arizona Department of Insurance suspended Meritus’ right to sell new policies or renew current ones and placed it under formal supervision, as it feared the company would fail midway through 2016. Federal officials also pulled the insurer’s polices from the health insurance marketplace website in late October.
Meritus was working to find new financial support or, barring that, to change to a for-profit. The bid to locate funds was unsuccessful and federal officials rejected the for-profit proposal.
“We’ve really been trying to understand all of our options and opportunities and really at this stage we’ve exhausted them,” Meritus CEO Tom Zumtobel told the Associated Press. “So we are working cooperatively with the Department of Insurance to really meet their supervisory order and wind the operation down.”
Meritus will continue to pay claims through the end of the year, and brokers and medical providers will be paid. The company is also setting up a hotline to help current clients find new insurance, which is expected to be operating by next week.
Zumbotel said his biggest regret is that policyholders’ rates will increase and they will be without the same access to the Maricopa Integrated Health System, a popular healthcare group that includes metropolitan Phoenix.
Meritus was started with a $93 million federal loan and employed 72 people before it was placed under oversight. It now has just over 60 workers and has about $32 million in cash on hand.
The co-op had a slow start, enrolling just 2,600 people in 2014 but taking off in 2015 when it lowered rates to become more competitive.
More than half of ACA-created nonprofit co-ops have now closed their doors.
