- Connecticut's insurance department has placed the state's co-op, HealthyCT, under an immediate order of supervision, the state announced, prohibiting the company from writing new business or renewing existing business.
- Individual plan members will remain fully covered through 2016, and group plan members that were just renewed July 1 will remain covered through June 30, 2017.
- HealthyCT has been deemed financially unstable after the federal risk adjustment program issued its June 30 notice informing the insurer it must pay $13.4 million into the program, said state Insurance Commissioner Katharine L. Wade.
It's no surprise to small insurers to see one felled by the financial strain of the current risk adjustment formula, which has been widely criticized for providing an unintended advantage to larger insurers compared to their smaller rivals. HealthyCT is not the only one suffering, as previously reported, and Maryland's Evergreen Health is fighting back.
HealthyCT was previously in good standing as one of the 10 surviving co-ops created under the ACA; it had been meeting monthly with the state insurance department to review its solvency, strategy and operations. "Prior to the CMS Risk Adjustment Report on June 30, the company had adequate capital and sustainable liquidity," the state said.
The co-op is set to receive $11.4 million reinsurance payments under the program that was created to stabilize the market by taking funds from insurers with the supposedly healthiest populations and transferring them to those with the supposedly sickest populations. Practically overnight, the insurer is accountable for a $2 million gap owed to the federal government.
Around 40,000 policyholders will need new plans as a result of the decision.
Wade had been among those to advocate to HHS for changes to the risk adjustment formula.
HealthyCT shall submit a run-off plan to the Commissioner for approval by July 15.