Another ObamaCare co-op winding down

Another ObamaCare co-op winding down
© Getty

The state of Connecticut is placing its nonprofit ObamaCare health insurer, called HealthyCT, under supervision and beginning a wind-down process due to financial struggles.

ADVERTISEMENT
The announcement is only the latest in a string of problems facing the nonprofit insurers set up under ObamaCare, known as co-ops. Republicans have seized on the troubles as evidence of problems in the health law as a whole. 

Before Connecticut, just 10 of the original 23 co-ops remained functioning. 

Despite the supervision order, it is not absolutely certain that HealthyCT will shut down. The state says that based on the state of its financial picture, it is possible that the company could emerge from supervision down the line. 

However, the state is currently preventing new people from signing up for insurance with the company and warning existing enrollees that they should plan for the need to find new coverage when their plan expires at the end of the year. 

“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,” Connecticut Insurance Commissioner Katharine Wade said in a statement. 

The state is pointing to an ObamaCare program called risk adjustment as the cause of the financial problems. 

Risk adjustment is a program that seeks to protect insurers with sicker enrollees by taking money from plans with healthier people and giving it to plans with sicker people. 

However, many co-ops (small insurers that do not have experience operating in this system), have suffered because of the payments to other insurers they have been forced to make under this program. 

The state pointed to the Obama administration’s announcement on June 30 of the risk adjustment payments for each company, which included a requirement for Healthy CT to pay $13.4 million into the program. 

Wade said the co-op’s finances were “seriously jeopardized by a federal requirement issued June 30, 2016 that it pay $13.4 million” into the program. 

The state noted that Wade has met with U.S. Health and Human Services (HHS) Secretary Sylvia Mathews Burwell to push for changes to the risk adjustment program, but has been unsatisfied with the response. 

In response, a spokesman for the Centers for Medicare and Medicaid Services, a unit of HHS that helps oversee the co-ops, pointed to a statement made last week defending the risk adjustment program as a safeguard for sicker enrollees, while noting changes had been made. 

“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 the CMS spokesman, Aaron Albright.