The Colorado Division of Insurance announced today that it will not allow ColoradoHealthOP to sell insurance on the Connect for Health Colorado marketplace in 2016.
Vincent Plymell, spokesman with the Division of Insurance, part of Colorado’s Department of regulatory agencies, said that the division had not yet taken the final step of decertification, but is preventing it from selling insurance in 2016.
The move will mean consumers will not be able to buy new HealthOP coverage or renew existing plans for 2016. Plymell said the division took the step before open enrollment starts next month to make sure that consumers don’t have a disruption in coverage.
“The DOI took this action as the financial viability of the HealthOP came into question after learning it would receive considerably less money that expected from a federal, risk-based reimbursement program known as ‘risk corridor,'” he said in a press release.
Earlier this month, the Centers for Medicaid and Medicare announced it would only reimburse the nation’s health insurers 12.6 percent of what they were entitled to under the program — $362 million out of the $2.9 billion promised. Colorado HealthOp was expecting around $16.2 million this year from the federal government, but will only receive about $2 million.
Colorado HealthOP is Colorado’s largest nonprofit health insurer, with more than 82,700 Coloradans utilizing its services and an additional 2,908 covered under small-group policies.
“We will make good on all obligations and provider claims will be paid,” said Julia Hutchins, CEO of the Colorado HealthOp. “Cash flow has not been an issue. We could make good on all our obligations even through the end of next year. But this will still cost the state $40 million to wind down this business, when it could have cost nothing.”
Marguerite Salazar, insurance commissioner, said she sympathized with the HealthOP.
“But the division has requirements and it has to protect consumers,” she said. “It is a key function of the DOI to make sure insurance carriers are financially stable enough to pay the claims of their policy holders. While Colorado HealthOP can continue to pay claims for the rest of 2015, we cannot allow it to sell or renew policies on the exchange for 2016.”
Sen. Cory Gardner, a vocal critic of the co-op model, released a statement regarding the decision.
“Once again, through absolutely no fault of their own, tens of thousands of Coloradans are facing the loss of their health insurance coverage. Losing coverage puts tremendous stress on individuals and on families, and seeing it happen as a result of poor planning and bad policy is infuriating. It’s critical for Colorado HealthOP to ensure that all outstanding claims are paid in a timely fashion and that a smooth transition into new coverage is found for those losing their insurance.
“This failure can be added to the very long list of Obamacare’s broken promises. Taxpayers are on the hook for millions of dollars in loans given out to the co-op, money that will likely never be repaid. The years since Obamacare’s passage have been marked by crisis after crisis in healthcare, and it’s far past time for a new plan.”
The Colorado announcement could make it the fifth to be decertified in the nation. Co-ops have also failed in Louisiana, Nevada and New York and a joint co-op in Iowa and Nebraska.
“We just had a member meeting last night with 250 people,” Hutchins said. “They showed up to provide feedback and ask questions and celebrate another good year. Last night was everything we could have wanted and today we’re closing.”
Plymell said last month that the Division of Insurance monitors the financial condition of the HealthOP, and, at the time, it met the state’s capital and surplus requirements. The co-op employed 80 people.
People with current HealthOP policies will be covered until the end of their policies, as long as they continue to pay their premiums. Starting in 2016, they will need to choose other plans. Members with individual policies will chose another carrier during the open enrollment period of Nov. 1 to Jan. 31. Consumers can select coverage on their own or through Connect for Health Colorado, but the tax credits are only available through the state-run insurance exchange.
Consumers are not responsible for payments to providers that should be paid by the cooperative, and the company will continue to pay those claims. If the HealthOP cannot pay the claims, the Colorado Life and Health Insurance Protection Association will step in and pay claims. The association is a nonprofit organization that assists Colorado residents with health insurance policies by companies having financial difficulties.
“If called upon, the … association is prepared to provide a safety net for members and ensure the payment of claims consistent with its statutory mission of protecting policyholders,” said Chris Chandler, a representative of the association.
And there are consequences for other consumers as well, the DOI said.
“Removing Colorado HealthOP from the exchange’s 2016 offerings has an impact on all the information and calculations for open enrollment,” the DOI release said. “This will also impact the advance premium tax credits that help make insurance more affordable for many. APtC is based upon the second-lowest silver plan in an area and since the Colorado HealthOP was the carrier with that second-lowest silver premium in many areas throughout the state, this decision will impact those calculations. The division is revising its figures for the number of carriers and plans available and the statewide and geographic area average premiums.”