After Feds Pull Funding, Vermont Health Co-op Folds | Off Message

After Feds Pull Funding, Vermont Health Co-op Folds

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The Vermont Health Co-op is no more.

Four months after state regulators denied the nonprofit's application to sell health insurance on the forthcoming exchange, the federal government pulled its funding Monday and ordered it to close. The co-op's board subsequently voted to dissolve itself, CEO Christine Oliver said late that evening.

"Without the financial support of our federal partners, it will not be possible to offer Vermonters the member-owned and member-governed health insurance option that will be available to Americans in many other states," Oliver said in a written statement.

Founded 15 months ago, the co-op sought to provide a third option for Vermonters slated to buy health insurance through the federally mandated health insurance exchange come January. But the South Burlington-based nonprofit's plans were derailed in May when the state Department of Financial Regulation denied its application to participate in the exchange.

In her decision, DFR Commissioner Susan Donegan questioned whether the co-op could sell insurance at competitive rates and criticized the organization's governance. Following Donegan's denial, the co-op waged an aggressive public relations campaign urging DFR to reverse its decision. It dumped co-founder and board chairman Mitchell Fleischer, whose involvement with the organization Donegan questioned, and rejiggered its board.

But in a letter sent to Oliver on Monday, James Kerr of the federal Center for Medicare and Medicaid Services made clear that those moves weren't sufficient. Because of Donegan's decision and "the underlying realities" of Vermont's health insurance marketplace, "the project faces insurmountable obstacles" to achieving its goals, Kerr wrote. 

The center had pledged more than $33 million in loans to the co-op last year as part of the Affordable Care Act's mandate to fund member-owned insurance cooperatives. But last week, the feds ceased disbursing the money. On Monday, Kerr formally terminated the agreement with the co-op and ordered Oliver to begin returning unused funds.

"We regret this outcome, and are grateful for all your efforts to establish a CO-OP in Vermont," he wrote.

In her statement, Oliver said the co-op would now focus on "working with the federal government to dissolve the organization and assisting the 12 Vermonters who will lose their jobs."

File photo of Fleischer and Oliver by Oliver Parini.

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