The closure of Health Republic Insurance of New York, arguably the largest of the ACA nonprofit cooperatives, left numerous insurance agents and brokers with millions of dollars in uncompensated work.
To ensure that the insurance agents and brokers affected by the closure receive their dues, the Association of Health Underwriters on December 7 appealed to Gov. Andrew Cuomo and state lawmakers to use a part of the state’s $1 billion budget surplus to cover for the unpaid work Health Republic failed to compensate for.
Negotiations for how the state’s budget surplus will be spent will begin April 1, 2016.
According to the Association of Health Underwriters, Health Republic’s unpaid commissions to brokers number in the millions.
“New York state should use some of that surplus to pay everyone what they are owed – doctors, hospitals and insurance brokers,” the trade group contested in a statement released December 7.
The association additionally stressed how important paying off the overdue commissions would be.
“What’s needed is a solution that avoids the usual outcomes of a failed insurance carrier – reduced payments or no payments to those who provided their professional services even after the carrier ceased reimbursement for those services – without inflating future insurance premiums or increasing NY residents’ tax burden.”
Health Republic Insurance of New York was shut down by regulators after it had lost about $52.7 million in the first six months of the year. In the previous year, Health Republic also lost $77.5 million. At its peak, Health Republic accounted for roughly 20% of private insurance plans sold through New York State of Health—the state’s federal health insurance marketplace set up under the ACA.
At first, Health Republic was given until the end of the year to close. The shutdown, however, was moved to an earlier date—November 30—as the co-op’s financial positioned wavered. It is believed that an untimely federal aid cut accelerated the co-op’s fiscal fall.
The collapse of Health Republic prompted many former customers to move on to other health insurers, such as Oscar. Some of these insurers (including Oscar), however, have turned to slashing their broker commission rates to save on cash, hurting brokers on this side of the fence as well.
