An enormous health insurance company is shutting down after losing tens of millions, even after the federal government stepped in to try to save it.
From Crain’s New York:
A nonprofit insurer born out of Obamacare is being shut down by state insurance regulators and the federal government.
Health Republic Insurance was ordered by the New York State Department of Financial Services, the Centers for Medicare and Medicaid Service, and the state’s Obamacare exchange, the New York State of Health, to stop writing new policies and wind down its existing policies once they expire. Those policies will be in effect through Dec. 31.
Manhattan-based Health Republic was New York’s only co-op insurer, a new model created under Obamacare. The federal government provided some two dozen co-ops with loans to help them establish new consumer-governed, nonprofit health insurers.
DFS made the announcement before the new open-enrollment period begins for the insurance exchange on Nov. 1.
In a statement, Anthony Albanese, the state’s acting insurance superintendent, said, “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.”
Crain’s reported in July that the insurer was losing tens of millions of dollars. Last year, Health Republic lost $77.5 million on $521 million in premium revenue. The federal government propped up the nonprofit with $241 million in low-interest solvency loans. In the first six months of 2015, the bleeding continued, with a $52.7 million loss, up from $12.4 million in the same period last year.
The insurer actually enrolled more people than it had projected—155,402 at the end of last year, compared with an early projection of 30,864—exceeding its goal by 504%. As of February 2015, Health Republic had a 19% share of the individual market in New York. With the launch of New York’s Obamacare exchange, Health Republic debuted as the market-share leader. It has about 200,000 members.
The state said that existing Health Republic small-group plan customers will be able to keep their policies for now because those are not tied to the calendar year, unlike the plans sold on the health exchange. DFS and the New York State of Health “will evaluate the best course of action with regard to small-group plans based on Health Republic’s ongoing financial results,” they said in a statement. “Any future determinations made on small-group plans will be announced with appropriate notice to help provide a transition period to new coverage and protect policyholders.”
In a statement, the company blamed its failure on politics and regulators. “While we are deeply disappointed with this outcome, we believe it is in the best interests of our members … Starting a new insurance company is a daunting task in any environment, but the challenges placed on us by the structure of the co-op program as enacted by a bitterly partisan congress, were simply too difficult to overcome.”
Well that’s awesome! It makes you wonder how many other companies are taking on way more customers than they can handle because the idiotic federal government expended its role into your health insurance.