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A.M.BestTV: U.S. Health CO-OPs Struggle With Viability Issues


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Lee McDonald
Group Vice President, Publication and News Services
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lee.mcdonald@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK - AUGUST 19, 2015 02:47 PM (EDT)
In this episode of A.M.BestTV, A.M. Best Assistant Vice President Sally Rosen and Senior Financial Analyst Wayne Kaminski highlight the challenges The Consumer Operated and Oriented Plan (CO-OP) Program is facing as it enters into its second year. Click on http://www.ambest.com/v.asp?v=coops815 to view the video program.

The U.S. health CO-OPs have attracted many insureds but they struggle to control expenses and manage losses.

"CO-OP enrollment for the first-quarter of 2015 was 869,677 compared to 478,152 for the fourth-quarter of 2014," said Kaminski. "This increase in enrollment on future financial performance is significant, because it demonstrates that interest is growing, along with a better understanding of how these CO-Ops operate. Additionally, for the smaller plans, the increase has allowed them to build up some scale, which is crucial for their viability going forward. However, the CO-Ops are challenged with operating efficiencies that are below par, having combined ratios as a group of over 110%. "

"For some plans it is the loss ratios, claims versus premiums, for others it is the administrative side," added Rosen. "These higher administrative expense ratios are due to some companies being so small, while some of the larger companies' first-quarter results were impacted by health insurer fees."

A.M. Best also recently published a briefing on the state of the U.S. health CO-OP program. To obtain a full copy of this briefing, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=240565 .

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