Another Obamacare co-op is being shut down by state regulators. HealthyCT will become the 14th co-op out of the original 23 to fail. The co-op will continue to insure current customers until next summer but it can not add any new customers or renew current ones. CNBC reports:
Connecticut’s financially “unstable” Obamacare health-insurance co-op was placed under state supervision on Tuesday, as regulators said 40,000 people covered by the company will ultimately have to find new plans for the coming year…
Until last week, the nonprofit HealthyCT had “adequate capital and sustainable liquidity” — but that fell apart Thursday with a federal requirement that hit HealthyCT with a $13.4 million bill, according to the Connecticut Insurance Department.
The co-op only learned last Thursday that it would be required to make the $13 million payment to the government. The Hartford Courant reports:
HealthyCT, whose motto is — “Plans for People. Not for Profit.” — just learned Thursday it had to pay $13.4 million to the federal government because of the risk adjustment rules that are part of the complex Obamacare system.
Under risk adjustment, plans that cover more healthy people have to send money back to the government, which is then redistributed to other plans that have a sicker population.
That payment, [Connecticut Insurance Commissioner Katharine L.] Wade said Tuesday, seriously jeopardizes the nonprofit’s financial health.
Healthy CT insures about 13,000 individual customers through the Obamacare exchange. It also covered another 27,000 through employer plans. Since current customers are not able to renew with Healthy CT, they will be required to find a new insurance plan in the next open enrollment period. Next year, once it completes its business with all currently enrolled customers, the insurer’s 72 employees will be out of work.
A statement on the Connecticut Insurance Department’s website says there is the possibility of an abatement of the state supervision, but the Department warns customers not to expect saying, “Given what we do know as of July 2016, however, it is recommended that group and individual insureds, medical providers and others not count on a near-term change in circumstances which would justify an abatement of the Order.”
Healthy CT is just the latest co-op to shut down under similar circumstances. In May a co-op in Ohio was liquidated by that state’s insurance regulators. Prior to that, co-ops in Arizona, Utah, South Carolina, Colorado, Iowa/Nebraska, Louisiana, Michigan, New York, Nevada, Tennessee, Oregon, and Kentucky have closed.