Just nine of the original 23 nonprofit health insurance cooperatives established under the Patient Protection and Affordable Care Act remain after another company announced its closure this week.
The Connecticut Department of Insurance put state co-op HealthyCT under supervision Monday, the beginning of a wind-down process that will eventually close the company at the end of June 2017. When it does shut its doors, insurance brokers will be tasked with assisting 13,000 individuals and companies overseeing 27,000 employees to find new healthcare coverage.
State Insurance Commissioner Katharine L. Wade said the department decided to place HealthyCT under an order of supervision following a Thursday notice from the federal government that it must pay $13.4 million to the Centers for Medicare & Medicaid Services as part of the ACA’s Risk Adjustment Program.
That payment seriously threatens the nonprofit’s already shaky financial standing.
“This is not an action that we take lightly but did so in order to immediately protect the company’s 40,000 policyholders in Connecticut and make certain that their claims will be paid under the terms of their policies and for the duration of those policies,” said Wade.
Under terms of the order, HealthyCT is prevented from signing new people up for insurance with the company, and existing enrollees cannot renew their plans once they expire. Some of these new policies took effect Friday and will continue through June 30, 2017, the company said. Group plans up for renewal August 1, 2016 will need to find a new carrier.
Though the order does not officially shut down the co-op – and the state says it’s possible HealthyCT could emerge from supervision down the road – a company spokesperson told the
Hartford Courant the company will wind down through the middle of next year and all 72 co-op employees will be out of work.
Federal risk adjustment payments have plagued the 11 co-ops that remained at the beginning of 2016, and though HealthyCT has chosen to slow operations, others are fighting for survival. The Illinois Department of Insurance announced last week that it was ordering state co-op Land of Lincoln Health to withhold paying the $31.8 million it owes under the federally mandated program.
Acting agency Director Anne Melissa Dowling said in a letter to federal authorities that she was acting to “preserve the solvency” of Land of Lincoln, which is suffering from financial setbacks after Congress voted to pull previously promised funding to the subsidized co-ops.
“A mid-year liquidation would trigger marketplace disruption and extreme financial harm” to the co-op’s 49,000 enrollees if the payment was made and Land of Lincoln forced to close, Dowling wrote in the June 30 letter.
Land of Lincoln CEO Jason Montrie was supportive of the department’s decision and called the risk adjustment program the “single biggest threat” to the state marketplace.
Officials with CMS have defended the program as both a safeguard for sicker enrollees, and as responsive to the concerns of smaller carriers.
“We continue to work with companies and states to refine the program so that risk adjustment works for both insurance companies and consumers shopping for affordable coverage,” said CMS spokesman Aaron Albright.
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