Thousands of Connecticut residents will need to find new health insurance coverage in the wake of the state’s suspension of HealthyCT from offering any new policies.
Created as a result of the Affordable Care Act, the nonprofit co-op health insurance company appears to be closing after the Connecticut Insurance Department (CID) prohibited it on July 5 from writing any new business, citing its “hazardous financial standing.”
“This is not an action that we take lightly,” said CID Commissioner Katherine Wade, “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.”
“As regulators,” Wade continued, “consumer protection is our prime mission and an essential part of that is ensuring that carriers can honor their promises to their policyholders. 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.”
“As a result,” she added, “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 development follows United Healthcare’s announcement in April that it plans to withdraw from almost all state health insurance exchanges created under the Affordable Care Act, including Connecticut’s Access Health CT (AHCT), by 2017. Anthem and ConnectiCare remain in AHCT.
“We realize that this will cause some concern for customers who purchased a HealthyCT plan via AHCT and we are committed to making sure they receive the help they need to find new coverage,” said AHCT CEO Jim Wadleigh.
“AHCT currently has 11,299 customers who purchased plans from HealthyCT,” he added. “Those customers will be covered under their current policies until December 31, 2016 and will have to enroll in a new plan when our open enrollment period begins November 1, 2016. Included in that number are 52 individuals who recently enrolled with HealthyCT when their Transitional Medical Assistance coverage eligibility ended.”
Wadleigh said that AHCT was developing an outreach plan for all those affected by the CID decision.
“We have been exceptionally proud of our efforts here at HealthyCT and our staff has worked tremendously hard to serve our policyholders,” said HealthyCT CEO Ken Lalime. “We are grateful for the strong stewardship of the CID, whose professional staff has helped guide us through the entire process from our formation.”
“I want to assure our policyholders that they are covered through the end of their policy periods,” Lalime added. “HealthyCT is committed to its customers and partners and we will continue to support them, pay claims and meet other financial obligations during the period of supervision.”
HealthyCT could technically resume normal operations if it can attain a sufficient liquidity to appease CID, though without the ability to write new business that would be a difficult goal to achieve.
“There will be enough carriers left in Connecticut to mean consumers will be able to transition to new coverage,” said Robert Laszewski, president of Health Policy and Strategy Associates Inc., a policy and marketplace consulting firm in Washington, D.C. “But they will have to go through the trauma of losing their coverage and finding a plan that covers their providers for deductibles and premiums that are similar to what they have.”
“More than anything, what this does is increase the lack of confidence people have in the Affordable Care Act,” Laszewski added. “There is just no way anyone can argue that Obamacare is stable so long as consumers have to face these insolvencies as well as the steady stream of double digit rate increases they are facing in Connecticut for 2017.”
In June, 14 insurance companies — both on and off the Connecticut health plan exchange — asked CID to increase their health insurance rates for next year. Anthem, which covers about 56,700 people in the state, is seeking an average 26.8 percent increase for individual health insurance plans marketed both on and off AHCT. ConnectiCare, covering roughly 47,500 residents, asked for an average 14.3 percent increase.