Insurer Health Republic Ordered To Stop Writing Policies
NYDFS is directing Health Republic to cease writing new health insurance policies and the co-op will commence an orderly wind down after the expiration of its existing policies.
Existing Health Republic small group plans – which, unlike individual plans, do not all have calendar-year policy terms – also now remain in effect. A news release by DFS suggests that Health Republic Insurance of New York co-op is being forced to close due to the danger of becoming insolvent.
A nonprofit insurer born out of Obamacare is being shut down by state insurance regulators and the federal government.
Note: Open enrollment for 2016 begins November 1. Under one of those programs, Health Republic had expected to break even, but instead it was assessed to pay around $80 million into the program’s pool, likely reflecting that it enrolled a relatively healthier clientele compared with competitors.
Instead, in synchronized moves Friday, the Department of Health and Human Services canceled an agreement that has funneled 5 million in start-up loans to Health Republic, and New York health officials blocked it from selling policies on that state’s exchange.
“Given Health Republic’s financial situation, commencing an orderly wind down process before the upcoming open enrollment period is the best course of action to protect consumers”, Anthony Albanese, acting superintendent of Financial Services, said in a statement.
Of the 415,352 who joined private insurance plans, about 83,000 enrolled with Health Republic. NYDFS and NYSOH will evaluate the best course of action with regard to small group plans based on Health Republic’s ongoing financial results.
Health Republic debuted in 2013 and sold plans on the New York health insurance exchange to capture business created by the federal Affordable Care Act, also known as Obamacare, which requires almost all Americans to have health insurance. These Consumer Oriented and Operated Plans (CO-OP) were envisioned as an alternative to the traditional insurance companies that dominate the nation’s health coverage landscape.
“While we are deeply disappointed with this outcome, we believe it is in the best interests of our members”, the nonprofit said Friday.
Any future decisons made on small group plans will be announced with enough notice to provide a transition period to new coverage and protect policyholders, the state said. Yet it has struggled with financial instability, which has become common among the co-ops and already has caused three others to founder. Health Republic was not available in much of the Southern Tier.
“High enrollment can be a blessing or a curse”, Mr. Newell said.
The shuttering of Health Republic, during slightest a fourth to stutter among a ACA’s odd 23 co-ops around a country, reflects a waste many insurers are saying in their business associated to a health law’s exchanges, that are quite strident for tiny skeleton though low pockets or diversified lines of business. The Oregon plan said in a statement: “While we share a common name, we are a completely independent company….[and] are not financially connected to Health Republic Insurance of New York”.