Connecticut’s Insurance Commissioner Katharine Wade said the 40,000 customers of HealthyCT shouldn’t panic about news that the health insurer looks likely to go out of business. Wade said her department will make sure that consumers experience a smooth transition.
"All their claims will be paid according to the terms of their policy. They should continue to go to their doctor. Their doctors will be paid," Wade told WNPR. "But when the open enrollment period begins November 1, and that's until December 31, they are going to need to select a new carrier."
Wade took the cooperative insurer under supervision after it was hit with a $13.4 million bill from the federal government.
Founded in 2011 and backed by doctors in the state, HealthyCT provides a non-profit alternative to the state’s new healthcare exchange under the Affordable Care Act. It currently has more than 10,000 individual customers and about 27,000 policyholders in group plans through their employers.
But late last week, the federal government imposed a huge risk adjustment payment on the company, under the rules of the Affordable Care Act. The payment is supposed to equalize risk between insurers who cover healthier populations and those who have sicker customers. The Connecticut Insurance Department said HealthyCT’s financial health is seriously jeopardized by the payment, and it will step in to ensure customers remain covered and providers are paid.
The unwinding of the non-profit is expected to take up to a year. It can’t write any new policies, but it said people currently insured will have coverage until at least the end of the year, at which time they’ll have to seek new coverage for 2017.
Commissioner Wade said there is a mechanism for HealthyCT to continue in business, but it’s highly unlikely.
"They would need to raise significant capital to put their financial condition back on good footing, and we could work with them to write business," she said. "But right now where the picture is, we're looking at a run-out situation."
Wade said HealthyCT’s demise will leave just two insurers writing policies on the state’s health insurance exchange, Access Health CT. She said she’ll be working with executives at the exchange to address the lack of competition for next year.
Meanwhile, the Connecticut State Medical Society -- one of the original backers of HealthyCT -- said the turn of events will only exacerbate the problems of a highly concentrated health insurance marketplace in Connecticut.
HealthyCT's CEO Ken Lalime declined to be interviewed, but the company said it is in the process of reaching out to policyholders.
HealthyCT is far from the only entity struggling under Affordable Care Act rules. Many such coops started up around the country to provide coverage when the Act was first passed, but with HealthyCT’s failure, 14 of the original 23 have now closed their doors or are likely to do so.
