It was a heck of a Christmas for David Fairchild and his wife, Clara Peterson. They found out they were about to lose their new health insurance.

“Clara was listening to the news on Iowa Public Radio and that’s how we found out,” Fairchild says. They went to their health plan’s website that night. “No information. We still haven’t gotten a letter about it from them.”

The two are the sole employees of a cleaning service and work nights. Fairchild has chronic leukemia but treats it with expensive medicine. Last year they saved hundreds of dollars switching from the insurer Wellmark to a plan run by CoOportunity Health. For the first time in a long time, Fairchild says, they felt like they had room to breathe.

“Basically it covered our office visits; covered exams,” he says. “It covered all but $40 of the medicine every four weeks. It was just marvelous. It probably was too good to be true.”

It was for them. CoOportunity Health has failed. The Affordable Care Act set aside funding for health care co-ops, to enable the organizations to compete in places where there aren’t many insurers. CoOportunity Health was the second largest co-op in the country in terms of membership, and one of the largest in terms of the federal funding it received.

But then CoOportunity hit a kind of perfect storm, says Peter Damiano, director of the University of Iowa’s public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.

“CoOportunity Health’s pool of people was larger than expected, was sicker than expected,” Damiano says. “So their risk became much greater than the funds that were available,”

The reason the co-op’s customers were sicker has a lot to do with what the insurance market looked like in Iowa before Obamacare. The largest insurer by far in the state was and still is Wellmark. But Wellmark decided not to offer any plans on Iowa’s health exchange, leaving just CoOportunity and one other insurer — Coventry — offering plans on the exchange throughout the state.

On top of that, when the Obama administration in late 2013 allowed people to keep the insurance plan they already had, many customers happy with Wellmark stayed put. Damiano says this meant many of the customers who flocked to CoOportunity tended to be like Fairchild — people with expensive health problems who’d had trouble paying for insurance before, in the market Wellmark dominated.

“It was always going to be a challenging market to try to reach,” says Damiano, “and on top of that, the whole idea of co-ops was relatively new and experimental. But it was to try to create competition, on that private sector approach,” says Damiano.

Not only were the patients sicker, but CoOportunity’s leaders initially thought they would enroll about 12,000 people in Iowa and Nebraska. They got about ten times that, according to Nick Gerhart, Iowa’s insurance commissioner.

Also, Gerhart says, the co-op thought it was going to get more federal money.

“On December 16 around 4 o’clock we were informed they weren’t going to get any further funding,” he says. “Nothing was pulled — it just wasn’t extended further.”

Gerhart is now essentially the CEO of the co-op because the state has taken it over. He likens the situation to a small business suddenly having its credit shut off by the bank. Even though CoOportunity is not officially dead yet, Gerhart is telling its customers to switch insurers.

He says it’s too early to make predictions about the fate for all co-ops.

“Ours was the second largest in the country, so you’ve got to look at it that way.” Gerhart says. “If the second largest can’t make it, how viable are the other ones? I don’t know. But at the end of the day they didn’t have enough capital to support 120,000 members.”

In a written statement, Dr. Martin Hickey, chairman of the board of the National Alliance of State Health Co-Ops, said, “The news about CoOportunity Health is not a statement on the health insurance co-op program or the co-op concept. It’s a reflection on the fact that all insurers — not just co-ops — are operating in unique markets with unique business plans and varying state regulations. The circumstances for CoOportunity Health in Iowa are not the same as those in the 23 other states in which co-ops are currently operating.”

But the co-op’s failure in Iowa has left David Fairchild and Clara Peterson scratching their heads.

“I mean the whole Affordable Care Act is [about] competition between insurance companies, and now we’re back down to what?” says Peterson.

For them, only one option: Coventry. They’ve already applied through healthcare.gov and now they’re now waiting for approval for a plan that will cover a lot less of Fairchild’s medicine expenses.

This story is part of a partnership between NPR and Kaiser Health News.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Obama administration officials have warned that ambitious experiments run by the health law’s $10 billion innovation lab wouldn’t always be successful. Now there is evidence their caution was well placed.

Only a small minority of community groups getting federal reimbursement to reduce expensive hospital readmissions produced significant results compared with those from sites that weren’t part of the $300 million program, according to partial, early results. The closely watched program is one of many tests to control costs and improve care being run by the Center for Medicare and Medicaid Innovation, which was created by the Affordable Care Act.

Dozens of community agencies on aging, from Ventura County, Calif., to southern Maine were offered money to try to ensure that seniors leaving the hospital received care that reduced their chances of being readmitted within a month.

But an early evaluation found that only four groups out of 48 that were studied in the Community-based Care Transition Program significantly cut readmissions compared with those of a control group.

At the same time, 29 groups have either withdrawn from the program or been terminated by the Department of Health and Human Services for failing to achieve targets, agency officials said. The CCTP project, which has grown since the evaluation was done, now has 72 participating sites  that administration officials hope will still produce readmission reductions and lessons in post-hospital care in return for the investment.

The evaluation, produced under contract with HHS by consulting firm Econometrica, is one of the first independent analyses of an innovation-lab test to be made public. It is dated May 30, 2014, but was posted on HHS’ website Jan. 2.

The 111-page report notwithstanding, experts said it’s too soon to pronounce substantial judgment on CCTP.

“It’s really too early to tell,” said Ellen Lukens, who leads the practice on hospital and post-hospital care at Avalere Health, a consulting firm. “Can you really evaluate this when it’s been such a short period of time?”

A five-year experiment, the program signed its first round of deals with community agencies in late 2011 and its fifth and last round in March 2013. Econometrica’s report covered partial-2012 results from groups participating in the early rounds, including some for which only a few months of data were available. Congress required the lab to closely monitor all tests, which explains the early evaluation, experts said.

One positive note was that “a lot of the sites were able to implement the program very quickly,” Lukens said, adding that later data will give a better idea of CCTP’s effectiveness.

The readmissions result — less than one site in 10 significantly reducing them — “seems kind of wimpy,” said Eric Coleman, a professor at the University of Colorado whose previous work on care for discharged patients influenced the CCTP program. He said he remains optimistic about the tests, however, also noting that the results are early and praising HHS for cutting off nonperforming groups.

“This is really the first glance of the first two waves of the program,” said HHS spokesman Raymond Thorn. “It’s too early to determine whether this model is failing or not. We will have successes.”

CCTP is one of dozens of experiments being run by HHS’ innovation lab, which has a 10-year, $10 billion budget. Preventable readmissions are calculated to cost the Medicare program for seniors $17 billion a year.

Paying community agencies to work with hospitals was thought to be one potential way of reducing them. Rather than getting grants, agencies are paid according to the discharge cases they handle.

The program faces several challenges, experts said. In awarding funding, HHS favored groups working with hospitals with high readmission rates, perhaps making success more difficult.

Plus, numerous groups and hospitals are working to cut readmissions through other means. That increases competition for aging agencies trying to make their mark and raises the difficulty of measuring their results separately from those of other programs.

Readmissions have been dropping nationally since Medicare began penalizing hospitals in late 2012 if they have too many. Some CCTP groups reduced readmissions — but so did comparison hospitals. That means the system improved overall in those areas and money was saved, but statistically the aging agencies did not show up as the critical factor.

Coleman faulted HHS for requiring agencies to file detailed reports on care models and administration rather than letting them focus on the main job.

“If it doesn’t reduce readmissions it’s game over, so why do you want all these process measures?” he said. “If we want these sites to succeed we need to get out of their way.”

Originally more than 100 agencies agreed to participate. But 29, including New York Methodist Hospital and Pennsylvania’s Delaware County Office of Services for the Aging, have withdrawn or didn’t have contracts renewed because they missed readmission-reduction or enrollment targets, HHS said.

A complete list of agencies that have left the program is here.

The health-law innovation program also includes accountable care organizations to cut costs and improve care quality; tests giving more resources to primary-care doctors to coordinate care; and innovation awards for promising models to improve Medicare efficiency.

Administration officials like to compare the lab to a venture capital fund, in which many investments are expected to fail but a few succeed spectacularly. Many Republicans think it’s a waste.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

In addition to the normal thrills and chills of the income tax filing season, this year consumers will have the added excitement of figuring out how the health law figures in their 2014 taxes.

The good news is that for most people the only change to their normal tax filing routine will be to check the box on their Form 1040 that says they had health insurance all year.

“Someone who had employer-based coverage or Medicaid or Medicare, that’s all they have to do,” says Tricia Brooks, a senior fellow at Georgetown University’s Center for Children and Families.

The law requires people to have “minimum essential coverage,” but most types of insurance qualify.

But for others, here are several situations to keep in mind.

If you were uninsured for some or all of the year

If you had health insurance for only part of 2014 or didn’t have coverage at all, it’s a bit more complicated. In that case, you’ll have to file Form 8965, which allows you to claim an exemption from the requirement to have insurance or calculate your penalty for the months that you weren’t covered.

On page 2 of the instructions for Form 8965 you’ll see a lengthy list of the coverage exemptions for which you may qualify. If your income is below the filing threshold ($10,150 for an individual in 2014), for example, you’re exempt. Likewise if coverage was unaffordable because it would have cost more than 8 percent of your household income, or you experienced a hardship that prevented you from buying a marketplace plan, or you had a short coverage gap of less than three consecutive months. These are just some of the circumstances that would allow you to avoid the penalty.

In addition, you don’t have to pay a penalty if you live in a state that didn’t expand Medicaid to adults with incomes up to 138 percent of the federal poverty level $16,104.60 for an individual in 2013) and your income falls below that level.

Some of the exemptions have to be granted by the health insurance marketplace, but many can be claimed right on your tax return. The tax form instructions spell out where to claim each type of exemption.

If you do have to go to the marketplace to get an exemption, be aware that it may take two weeks or more to process the application. Act promptly if you want to avoid bumping up against the April 15 filing deadline, says Timothy Jost, a law professor at Washington and Lee University who is an expert on the health law.

If you don’t qualify for a coverage exemption

If none of the exemptions apply to you, you’ll owe a penalty of either $95 or 1 percent of your income above the tax filing threshold, whichever is greater. The penalty will be prorated if you had coverage for at least part of the year. The amount of the penalty is capped at the national average premium for a bronze level plan, or $2,448 for an individual in 2014.

The instructions for Form 8965 include a worksheet to calculate the amount of your penalty.

If you received a premium tax credit for a marketplace plan

Under the health law, people with incomes between 100 and 400 percent of the federal poverty level ($11,490 to $45,960 for an individual in 2013) could qualify for premium tax credits for 2014 coverage bought on the exchanges. If consumers wished, the tax credit was payable in advance directly to the insurer. Many chose that option.

The marketplace determined the amount of premium tax credit people were eligible for based on their estimated income for 2014. At tax time those estimates will be reconciled against actual income. People whose actual income was lower than they estimated may have received too little in advance premium tax credits. They can claim the amount they’re owed as a tax refund.

People whose income was higher than estimated and received too much in advance premium tax credits will generally have to pay some or all of it back. The amount that must be repaid is capped based on a sliding income scale, but people whose income is 400 percent of poverty or higher will have to pay the entire amount of any tax credit back.

If you bought a plan on the marketplace, you’ll receive a Form 1095-A from your state marketplace by Jan. 31 that spells out how much your insurer received in advance premium tax credits. You’ll use that information to complete Form 8962 to reconcile how much you received against the amount you should have received.

Assuming the information on the form is correct, “It should be easy to reconcile,” says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. Tax software programs and tax preparers should know how to make the calculations, she said.

In addition to using commercial tax software or hiring tax preparer, many lower income consumers and seniors can get free tax preparation assistance through the IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.

Despite resources to help consumers, this first filing season is likely to be bumpy, particularly for people who have complicated family situations or who receive inaccurate information from the marketplace.

“There is just so much confusion out there,” says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation (KHN is an editorially independent program of the foundation.). “People are going to see these forms and not have any idea what they’re supposed to do with them.”

Please contact Kaiser Health News to send comments or ideas for future topics for the Insuring Your Health column.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

PALM BEACH GARDENS, Fla. — Rita Gorenflo’s 7-year-old son Nathaniel was in severe pain from a sinus infection.

But since the boy was covered by Medicaid, she couldn’t immediately find a specialist willing to see him.  After days of calling, she was finally able to get Nathaniel an appointment nearly a week later near their South Florida home. That was in 2005.

Last month, ruling in a lawsuit brought by the state’s pediatricians and patient advocacy groups, a federal district judge in Miami determined Nathaniel’s wait was “unreasonable” and that Florida’s Medicaid program was failing him and nearly 2 million other children by not paying enough money to doctors and dentists to ensure the kids have adequate access to care.

The Florida case is the latest effort to get federal judges to force states to increase Medicaid provider payment rates for the state and federal program that covers about 70 million low-income Americans. In the past two decades, similar cases have been filed in numerous states, including California, Illinois, Massachusetts, Oklahoma, Texas and the District of Columbia– with many resulting in higher pay.

But while providers and patient advocates nationwide hailed the Florida decision, they are deeply worried about a U.S. Supreme Court case  that they say could restrict their ability across the country to seek judicial relief from low Medicaid reimbursement rates.

The high court on Jan. 20 will hear a case from Idaho seeking to overturn a 2011 lower court order to increase payments to providers serving Medicaid enrollees with development disabilities. In the original case, five centers serving developmentally disabled adults and children argued that Idaho was unfairly keeping Medicaid reimbursement rates at 2006 levels despite studies showing that the cost of providing care had risen.

Idaho officials argue only the state and federal government should be able to set provider fees in Medicaid  and all other “private parties,” including patients and providers, should not be able to use the court system to gain higher rates. Twenty-seven states and the Obama administration are supporting Idaho’s appeal, along with the National Governors Association.

But providers and patient advocacy groups say they need to use the courts because states too often put their overall budgetary needs over the need of Medicaid patients to have adequate access to doctors and hospitals. Low rates inhibit doctors, dentists and other providers from participating in Medicaid, they say.

“Without recourse to the courts… hospitals and other providers will continue to bear losses that, for some, are unsustainable,” the American Hospital Association said in a brief filed in the Supreme Court case.

Although federal law says provider payments should be sufficient for Medicaid recipients to have the same access to services as those with private insurance, advocates say in court papers that the federal government is “a paper tiger”  when it comes to enforcement.

Battles over rates paid by Medicaid, the nation’s largest single health program, are nothing new. Access issues have gained more attention recently, however, because 27 states have expanded eligibility under the Affordable Care Act, resulting in enrollment of millions more people.

Matt Salo, executive director of the National Association of Medicaid Directors, said patients and providers already have the ability to lobby state and federal governments to raise reimbursement rates.

“These lawsuits result in a massive expenditure of states’ limited resources,” he said. “There are more appropriate avenues for them to get their concerns across than dragging state Medicaid agencies to court.”

If Idaho wins its appeal to the Supreme Court,  the decision could severely limit such suits, legal experts say.

“It would be beyond just a chilling effect,” said Sarah Somers, managing attorney for the National Health Law Program, a patient advocacy group.

The lawsuits are not frivolous, she said — they are an important tool. “The record of success in lawsuits …shows that courts found that Medicaid laws were being violated. If it costs money to enforce the law and to comply with it, that’s not a waste.”

Other lawyers for providers and patients agreed.

“These cases can be very effective in terms of increasing rates,” said Zenia Sanchez Fuentes, an attorney in Washington, D.C. Her firm helped argue a case that in 2006 led the District to increase fees to dentists, which led to more dentists seeing Medicaid patients. That lawsuit was initially filed in 1993.

“It can take a while, but it’s well worth taking on,” she said.

Somers pointed to the Florida case as one example of why providers and patients groups need the courts.

For years, Florida has been one of the lowest-paying states in reimbursing physicians, court documents show. The low pay has led many physicians either to not participate in Medicaid or severely limit how many recipients they are willing to see, the court ruled.

Florida’s own reports showed that in 2007 more than 380,000 children on Medicaid who should have received at least one checkup did not receive any preventive care. In the same year, the study showed just one in five children on Medicaid saw a dentist, the lowest rate in the country.

Such access problems are not unique to Florida.

A federal study in November found millions of low-income children were failing to get the free preventive exams and screenings guaranteed by Medicaid and the Obama administration is not doing enough to fix the problem.

The report, by the Department of Health and Human Services’ Office of Inspector General, found 63 percent of children on Medicaid received at least one medical screening in 2013, up from 56 percent in 2006, but the figure was still far below the department’s goal of 80 percent. Florida’s rate in 2013 was 57 percent.

Tommy Schechtman is a president of the Florida chapter of the American Academy of Pediatrics and a Palm Beach Gardens pediatrician who testified in the Florida case.

He said the pediatricians did not want to file the lawsuit, but the state gave them no other option.

“We were not making any progress in Florida in improving access and we had seen some success in other states with litigation,” he said.

U.S. District Judge Adalberto Jordan, ruling on a 10-year old case on New Year’s Eve, found Florida was violating federal Medicaid law by not ensuring that children have adequate access to providers.

Florida officials could appeal the decision, and plaintiffs’ attorney Stuart Singer said the Supreme Court decision in the Idaho case could complicate matters.

The Florida Medicaid agency harshly criticized the ruling.  “The Judge’s outdated observations pertain to a Medicaid program that no longer exists,” said a statement from the Florida Agency for Health Care Administration.

“Florida’s new statewide Medicaid managed care program is cost-effective and a working success.”

In Medicaid managed care, the state pays private health plans a monthly rate per member to coordinate coverage. Until last year, managed care was optional for most Florida Medicaid recipients.

For years, Florida health officials have said managed care companies help patients because the state can hold such plans accountable if they deliver poor care — a point often disputed by providers. Health plans often limit the number of providers to steer patients to those in their networks.

In his ruling, Judge Jordan said the care and access the Medicaid plans provided was no better than the state’s traditional system  in which it pays providers directly for each service provided.

“Children enrolled in Medicaid HMOs suffer from the same lack of access as children in …fee-for-service Medicaid,” his ruling said.

Jordan will hold a hearing later in January to determine a penalty and how the state should fix the problem.

For Rita Gorenflo, whose son Nathaniel is now 16, the Florida ruling is good news, though it’s uncertain what it will mean for her family because the case took so long to wind its way through the courts.

“I am thrilled that all of the kids on Medicaid will be able to access better care,” said Gorenflo,  an emergency room nurse for 18 years. “I can advocate for my kids fairly well, but there are some parents that can’t, and their kids deserve care.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.