In a last-minute move, Arizona and federal regulators have shut down a co-op from selling plans to Obamacare customers.
That brings the number of taxpayer-funded Obamacare insurance startups to close down to 11, with open enrollment starting on Nov. 1.
State regulators have suspended the company that operates as Meritus Health Partners and Meritus Health Mutual Partners to ability to sell or renew plans to Obamacare customers for 2016. The federal government kicked the co-op out from offering plans on the Obamacare marketplaces.
The Arizona Department of Insurance had issued an order of supervision against the company, requiring that the insurer no longer offer plans after the end of the year.
Meritus did not choose to accept the order of supervision. The company's CEO said that the order "really caught us by surprise," according to a report in the Arizona Republic. CEO Tom Zumtobel said that he couldn't get feedback from state regulators on what they needed to do, according to the Republic's report.
The reason appears to be linked to financial woes, which have doomed the other 10 co-ops. Meritus received $93 million in federal start-up and solvency loans but has yet to make a profit and has lost more than $78 million since it started, the department said.
The decision on Friday comes two days before open enrollment kicks off for Obamacare. It means that all of Meritus' customers will need to find a new plan.
Meritus has more than 50,000 customers, the Republic said.
Arizona's Department of Insurance said that there are expected to be eight companies on the exchange offering about 120 individual plans and three companies offer 15 small group plans.
Meritus is the second co-op to fold this week, with Utah's co-op already announcing it won't offer plans in 2016. In addition, New York's co-op Health Republic will shut down a month early at the end of November. It had originally planned to offer plans until the end of the year, but regulators said its financial woes are worse than originally thought.
The Affordable Care Act created 23 public and nonprofit co-ops to spur more competition on the Obamacare exchanges. So far 11 have shut down, mainly due to financial problems.
A reason that many have given for closing up shop is a lack of federal funding from a program intended to mitigate insurance losses.
Republicans have seized on the co-op failure, saying that the law has wasted taxpayer money.
"With 11 of 23 co-ops shutting down, the cost now tops $1.1 billion — a nasty Halloween trick for taxpayers," said Rep. Fred Upton, R-Mich., chairman of the House Energy & Commerce Committee. The committee will hold a hearing on the co-ops next week.
The Centers for Medicare and Medicaid Services, which oversees the co-op,said that its priority is to ensure access to marketplace customers.
"We are working with Arizona officials to do everything possible to make sure consumers stay covered," the agency said.
The administration has said that it had expected some co-ops to have problems since they are startups.