Tens of thousands of people in Connecticut will have to find new health insurance coverage after the state suspended HealthyCT from offering policies.
Due to "hazardous financial standing," the state insurance department has placed HealthyCT under immediate order of supervision.
Insurance department commissioner Katharine L. Wade announced that the immediate order of supervision means "the company was prohibiting from writing new business or renewing existing business in Connecticut effective immediately in order to protect its existing policyholders."
HealthyCT is an insurance Co-Op that currently serves 40,000 people, but, because of new fees tied to the Affordable Care Act, the company is in danger of going under, so the state is stepping in to protect policyholders.
“This is not an action that we take lightly, 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,” Wade said in a statement on Tuesday.
HealthyCT was facing financial issues and after the federal government informed the company that they would owe nearly $13.5 million this year as part of the Affordable Care Act's risk adjustment program. The state insurance department stepped in and issued an order of supervision.
“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, 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,” Wade said.
The state's insurance department has met with HealthyCT since its inception. Insurance officials said they have met monthly to "monitor its financial solvency, its business plan and operations." The insurance department said before the federal requirement on June 30, HealthyCT "had adequate capital and sustainable liquidity."
If you are on of the 13,000 individual policy holders, you will be fully covered until the end of the year. During open enrollment for 2017, those policy holders will need to purchase a new plan.
The 27,000 members of with large and small employees will also retain their Healthy CT coverage up until June 30 of next year. But remember they cannot re-up for any plan starting next month.
Wade said the state tried to save HealthyCT, but the money just wasn't there.
"This is a sad day for all of us this is a company that's been working very hard for years to provide coverage to consumers and it's a hard day for Connecticut," Wade said. "But this is not something we did lightly here at the insurance department."
HealthyCT CEO Ken Lalime said his company "is no longer selling or renewing health insurance plans." Lalime said the company is "committed to its customers and partners" and will "support them, pay claims, and meet other financial obligations during the period of supervision."
“We have been exceptionally proud of our efforts here at HealthyCT and our staff has worked tremendously hard to serve our policyholders. 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 said in a statement on Tuesday.
“I thank the Insurance Department for stepping in to protect the consumers who currently have HealthyCT plans,” said State Sen. Kevin Kelly (R-Stratford). “But let’s be very clear about what caused this problem. We are seeing the direct effects of an unsustainable health care system created by the Affordable Care Act. Democrats initially sold the Affordable Care Act as a step forward for health care. It was touted as a sound, robust way to improve access to health care and reduce costs while maintaining quality services. Meanwhile, Republicans made the observation that while everyone wants to see better, more affordable care, the ACA could never be the be-all end-all solution. We warned that creating a system like this was not sustainable. The HealthyCT CEO just two months ago was quoted as saying how viable and stable HealthyCT was. And last November there were also boasts of confidence. But the insurer did not see the obvious, well-known federal plan to turn off the flow of federal funding. Now, without that false sense of stability created by federal dollars, Connecticut insurers are either requesting steep rate increases or they are in deep financial trouble. The ACA is not sustainable, the federal government is seeking more funding, and the insurers created by the ACA simply cannot afford to pay what they need to keep the system going. Come November, Connecticut may only have two insurers left on the state’s health exchange. Our families and our children - the insurance consumers - are the ones who will lose out on choice, affordability and access.”
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