Northwell folds insurance arm CareConnect
- Northwell Health, a 22-hospital system based in New York state, announced it is shuttering its insurance arm CareConnect, and withdrawing from the state's insurance market next year.
- CEO and President Michael Dowling cited uncertainty surrounding the Affordable Care Act (ACA) and regulatory issues as causes for the decision.
- The system stated the business would have been profitable this year, but it paid $112 million into the ACA's risk adjustment pool, amounting to about 44% of CareConnect’s 2016 revenue from its small-group health plan. "CareConnect would be facing another risk-adjustment payment of more than $100 million in 2018 from its 2017 small-group revenue," the statement continued.
The ACA marketplace hasn't been financially kind to all upstart insurers. In 2015, for example, it was announced insurers offering health plans on the exchanges would only get about 13% of the money they were intended to receive through the risk corridor program.
This move was a death blow for most of the insurance co-ops created under the ACA, as many didn't have cash on hand to weather the storm. Only four of the original 23 co-ops are still standing. This development had made the nascent market a shaky bet. In response, some insurers created for the ACA market like Oscar diversified their business portfolio.
In addition to risk corridor payments, Dowling called out the uncertainty in Washington, D.C. surrounding the future of healthcare regulation. "It has become increasingly clear that continuing the CareConnect health plan is financially unsustainable, given the failure of the federal government and Congress to correct regulatory flaws that have destabilized insurance markets and their refusal to honor promises of additional funding," he wrote.
CareConnect operations will continue over the next year as Northwell works to transfer policy holders to other coverage plans. CareConnect had 118,086 customers as of the end of June, Bloomberg reported.
"While it is unfortunate that the continued uncertainty across the nation due to the repeated actions of the federal government to undermine the Affordable Care Act at this time in the insurance cycle has caused CareConnect to begin an orderly wind down from the market, we recognize that this decision will help Northwell focus on its core mission to deliver healthcare services to New Yorkers," Maria Vullo, superintendent of New York's Department of Financial Services, stated in reaction to the news.
The move will allow Northwell to focus on more profitable areas. “Moving forward on our population health journey, we will continue to explore new models of care delivery that will help us accomplish the triple aim of improving the patient experience and the health of our communities, and reducing the per capita cost of care,” Dowling stated.
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