SALT LAKE CITY — This week's announcement of the closure of Utah's cooperative health insurer leaves 65,000 residents looking for a new insurer and fueled critics of President Obama's health care law, which created the co-ops.
State regulators moved to shut down Arches Mutual Insurance Co. after the insurer learned it would only get a fraction of the federal money it was counting on, leaving it scrambling for cash. It will keep paying claims for customers this year but will close in 2016.
Almost all of the 23 co-ops created under the 2010 health law have struggled and Utah's is the 10th to shut down.
Arches expected about $14 million this year from a stabilization fund set up under the law. But on Oct. 1, the federal government announced that the fund collected less money than expected and insurers would only receive about 13 percent of their requests.
A closer look at what the closure means for customers and other programs under the health law:
MEDICAID AND THE HEALTH LAW
Opponents of the health law said the shuttering of Arches bolsters their arguments and shows why Utah should reject Medicaid expansion as offered under the law.
The federal government has offered to pay most of the costs if states open Medicaid to more low-income people. Utah's GOP-controlled Legislature has rejected plans to do so, citing concerns that the federal government may not follow through, among other worries.
Lawmakers plan to consider the issue again in 2016, but the Arches closure should give lawmakers pause, according to the Utah chapter of Americans for Prosperity, a conservative group backed by the billionaire Koch brothers.
"Clearly by seeing the Arches co-op fail, we know that the federal government doesn't always keep its promises," said Evelyn Everton, the group's Utah director.
Rep. Dean Sanpei, a Provo Republican, said the situation may make some of his colleagues more reluctant to accept a Medicaid plan that relies heavily on money from Washington.
"They couldn't do it here so what's to have us believe that they'll be able to make all their obligations in the future? This is clearly not a good sign," he said.
Rep. Rebecca Chavez-Houck, D-Salt Lake City, said people shouldn't conflate the program that Arches was counting on and Medicaid. She said the federal government has funded Medicaid as promised for more than 50 years, and she thinks that money will still be there.
Chavez-Houck said Republicans in Congress have tried to chip away at funding parts of the health law, making it a "self-fulfilling prophecy" that its new programs like the co-ops will fail.
COVERAGE FOR CUSTOMERS
Arches planned to offer policies in each of Utah's 29 counties next year through the online insurance marketplace, healthcare.gov. The website is another key prong in Obama's law and offers subsidies for those who can't afford coverage.
The company's closure leaves customers in 20 counties with only one other insurer to choose from if they rely on the website and its subsidies.
Moab-based broker Renee Troutt with Central Utah Insurance Agency said Arches was a popular choice with her clients. Arches covered some doctors in nearby Grand Junction, Colorado, where many Moab residents will drive to see specialists.
Now, only one insurer will be open to Grand County residents using the online marketplace, but Troutt said that company does not have similar arrangements in Colorado. Instead, residents may have to drive to Provo or Salt Lake City for specialists.
Since the news of Arches' closure, Troutt said her phone is "burning of the hook" from customers worried about what kind of options they'll have next year.
Moab resident Cathy Gerving, 59, said she had a hard time finding affordable insurance until she signed up for an Arches plan about a year ago that cost $350 a month.
She said she now worries if she'll be able to keep the 2016 appointments she's scheduled with doctors who treat her multiple sclerosis.
Gerving said it can take weeks or months to get an appointment with an MS specialist, but first she has to find a new insurer and see if they'll cover her current doctors.
"Now we've got to start all over," Gerving said.