The Connecticut insurance commissioner is blaming a $13.6 million risk adjustment payment required by the Centers for Medicare & Medicaid Services for forcing HealthyCT out of business.
Effective immediately, HealthyCT, the state’s nonprofit consumer operated and oriented plan, will not be able to issue new policies or renew existing policies, Insurance Commissioner Katharine Wade announced Tuesday. She placed the five-year-old CO-OP under an order of supervision (.pdf) providing for “an orderly run-off of the company’s claim payment under close regulatory oversight.”
As of January more than half of the 23 CO-OPs started under the Affordable Care Act had shut down, primarily because of financial struggles. While Republicans generally blame CMS and its policies, some Democrats say Congress set the CO-OPs up to fail by cutting vital funding. For its part, CMS says the CO-OPs need to tighten their operations and improve their financial systems.
The Connecticut CO-OP “had adequate capital and sustainable liquidity” before the CMS Risk Adjustment Report (.pdf) was issued June 30, Wade said in the announcement. Indeed, the insurer had projected a profitable first quarter for 2017. But the insurance commissioner said the risk adjustment payment along with a previous federal decision to withhold payments under the risk order “created a level of financial stress” that led to the order.
Wade said she and other state insurance regulators told federal authorities they were worried the risk adjustment formula would damage state health insurance markets--especially for small insurers like HealthyCT. The company has 40,000 policyholders. Wade met with Sylvia Burwell, Health and Human Services secretary, earlier this year to ask that the formula be changed.
The plan’s 13,000 individual policyholders will be covered through the end of the calendar year, but must select different carriers for the 2017 plan year. HealthyCT can’t write or renew employer group policies after Aug. 1, but group plans that renewed as of July 1 will be covered through the company through June 30, 2017.
- read the announcement
- here’s the order of supervision
- see FAQs about the order and its impact on HealthyCT and policyholders
- check out the CMS Risk Adjustment Report