Connecticut ACA co-op could be next to shut down

HealthyCT, Connecticut’s nonprofit health insurance co-op, is being placed under supervision by the state after CMS said it will owe millions in risk-adjustment payments.

The order from Connecticut Insurance Commissioner Katharine Wade said the co-op was expected to be on solid financial footing, despite 13 of the original 23 co-ops set up under the Affordable Care Act having shut down over money problems. What changed HealthyCT’s status was the latest risk-adjustment mandates from CMS.

“Unfortunately, HealthyCT’s financial health is unstable, having been seriously jeopardized by a federal requirement issued June 30, 2016, that it pay $13.4 million to the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services as part of the Affordable Care Act’s Risk Adjustment Program,” Wade said in a statement. “As a result, it became evident that this risk adjustment mandate would put the company under significant financial strain. This order of supervision provides for an orderly run-off of the company’s claim payment under close regulatory oversight.”

The co-op would be paid $11.4 million in the separate reinsurance program, with the net result leaving HealthyCT on the hook for $2 million owed to the federal government. The order said this expense, coupled with the agency’s inability to pay out the full amount requested under the risk-corridor program, put the co-op in such a precarious position that the state needed to act.

The risk-adjustment figures have been unfavorable to several other co-ops in recent years. Maryland’s Evergreen Health Cooperative has gone as far to sue HHS, arguing the program has benefitted older, larger insurers with more claims data, while understating the risk taken on by smaller insurers like the co-ops.

Wade’s statement said she’s met personally with HHS Secretary Sylvia Burwell to ask for changes to the risk-adjustment formula.  

CMS responded to the order by referring back to a statement issued along with the risk-adjustment numbers last week.

“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. 

None of this guarantees HealthyCT will join other co-ops in closing up shop, with the state’s order saying it could emerge from supervision if it has “attained sufficient liquidity, surplus and reserves” and the commissioner decides supervision is no longer necessary.

For now, the order means the co-op can’t take on new customers, and existing customers may have to look for new plans for 2017. For the 13,000 individual policy holders, their coverage will last until Decembver 31, and they’ll have to choose a new carrier during the next open enrollment period.

For the 27,000 covered in the group market, any plans that renewed July 1 will provide coverage through June 30, 2017, but members covered by plans that were scheduled to renew August 1 or later will be forced to find a new carrier.