“It has become increasingly clear that continuing the CareConnect health plan is financially unsustainable.”
Northwell Health, New York’s largest hospital network, has decided to stop selling Obamacare plans over….you guessed it…huge losses. From The New York Post:
Northwell Health (the former North Shore-Long Island Jewish Medical Center network ) blamed a flawed provision in the Affordable Care Act — and the lack of action in Washington to fix it — as the culprits for winding down its CareConnect insurance company.
CareConnect enrolled 14 percent of firms in New York’s small group market and 8 percent of customers in the individual ObamaCare market — mostly on Long Island and in New York City.
In 2016, the hospital doled out $112 million “into a risk insurance pool created to prop up insurers that had a disproportionate number of high-risk or money-losing clients.” This pool helps stop the “insurers from ‘cherry-picking’ younger and healthier customers who are less expensive to cover.” Health Data Management reported:
CareConnect said new insurers like itself were disadvantaged by an Affordable Care Act program called risk adjustment, because they had less information about their customers. The program is designed to transfer money from insurers with healthy customers to those with sick ones and relies on insurers to assess their own members.
The company was required to pay out large sums under the program, fueling a $156.6 million loss in 2016, up from $31.8 million a year earlier, according to regulatory filings. New York’s insurance regulator is making changes to the program for 2018 to limit how much insurers can pay in or receive. CareConnect said it would have been profitable this year if it were not required to pay $112 million into the risk-adjustment program.
However, these payments caused a major financial problem for CareConnect and Northwell, which created CareConnect as a way “to direct patients to its hospitals and doctors, promising a simple, limited network of health providers and lower process.”
Like other businesses, CareConnect faced too many pressures within the Obamacare market after too many of them “misjudged the business, charging too little for premiums and the taking losses as patients used more care than they projected.”
From Health Data Management:
The hospital system also said that uncertainty around the fate of the Affordable Care Act had clouded its business prospects, contributing to its decision to close the unit.
“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,” said Michael J. Dowling, Northwell’s chief executive officer.
Dowling concluded that “Northwell saw ‘no viable path to profitability in the foreseeable future’ for the business.”
The New York Post reported:
Northwell will be submitting its withdrawal plan to the state Department of Financial Services and will continue operations over the next year to give customers time to transfer to other plans.
Financial Services Superintendent Maria Vullo, in a statement, said Northwell’s decision to close CareConnect was “unfortunate” — but wouldn’t contest it.
“We recognize that this decision will help Northwell focus on its core mission to deliver health care services to New Yorkers,” Vullo said.
She insisted that New York’s health insurance remains “robust” and New Yorkers still have choices for coverage.
The New York Post editorial board wrote a scathing op-ed over this development, reminding everyone that you can blame the GOP all you want, but to remember that Obamacare did this:
You can blame Republicans in Congress for cutting the taxpayer subsidies that Democrats had promised, but that amount was smaller than what the Democrats were forcing it to pay to other insurers with their ObamaCare rule.
Partisan war in Washington is further destabilizing the health-insurance markets — but it’s the ObamaCare law that put those markets at Washington’s mercy, even as it greatly added to the polarization.
Plus: ObamaCare only works with massive taxpayer subsidies not just for people buying exchange policies, but also to insurers — and that’s just to maintain pre-Obama enrollment levels. (The net gains in coverage under the law come from Medicaid expansion.)
The whole house of cards is barely holding together, but the left, led by Sens. Bernie Sanders and Elizabeth Warren, wants to “fix” it by imposing single-payer healthcare — which would require vastly more federal spending.
Worse, it would plant the entire health-care system in the middle of the Washington crossfire. How is that a solution?
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