About 200,000 New Yorkers will see their Health Republic policies expire on Monday, marking the demise of the 12th health insurance co-op established under the Affordable Care Act.
That’s more than half of the 23 consumer operated and oriented plans that were created with federal loan money to promote competition on the state online exchanges selling insurance under the 2010 health care law.
The 12 co-ops, which received $1.2 billion in taxpayer-funded loans, failed for a variety of reasons, including:
— Severe limitations on using the loan money for marketing or attracting outside investment money.
— Under-priced premiums in the case of some co-ops and overpriced premiums in the case of others.
— Congressional budget-cutting that reduced the original $6 billion in grants and loans to $2.4 billion of only loans.
— Lack of understanding by federal health officials of how hard it would be for the co-ops to compete with established insurers. New federal initiatives frequently use pilot programs to work out problems before going nationwide, but that wasn’t the case with the co-ops.
— Unexpected sharp cutbacks in reimbursement rates under a federal “risk adjustment” formula that moves money from companies with healthier customers to those with sicker ones.
Several co-ops said they wouldn’t be able to enroll new customers in 2016 after theCenters for Medicare and Medicaid Services (CMS) announced that certain reimbursement rates would be only 12.6 percent of what had been expected. Eighteen co-ops were denied money they were expecting, according to Martin Hickey, CEO of New Mexico Health Connections and chairman of theNational Alliance of State Health CO-OPs.