The state is losing a cooperative from its 2016 marketplace, as it has started a “wind down of business”.
An Oregon insurance co-op is now stepping out of the state’s health plan market for next year as it has entered into a “wind down of business”, claiming that the recent announcement from the government that it will honor only 12.6 percent of the risk corridor payment of insurers is to blame.
This withdrawal of the co-op will mean that there will be 15,000 members in the state without coverage.
The people who had previously had their health plans through the nonprofit insurance co-op will now need to look to the HealthCare.gov website during the open enrollment period starting on November 1 in order to buy a new plan. It is estimated that about 10,000 of the members who will be losing their coverage when the co-op withdraws are employees of small businesses. The co-op has stated that the reason it cannot continue to cover the members is because of the lack of reimbursement from the federal government for the losses they have experience.
The Affordable Care Act has not included the insurance co-op in its reimbursement for the risk of losses.
The health care reform provides insurance companies with a type of reimbursement from the federal government if they are to experience losses within the evolving industry. This concept was designed to help to spread out the business risk among the insurers so that they would have a greater likelihood of participating. At the time, this was done as it was unclear as to how many insurers and how many members would join into the insurance pool.
The funding for that program was supposed to be partly provided by health insurance companies whose premiums were greater than the cost of the claims of their members, but that has now faced a shortfall of $2.5 billion.
President of the Health Republic insurance co-op, Dawn Bonder explained that “Since our inception in 2013, Health Republic designed and priced all our plans in reliance upon the risk sharing guarantees of the Affordable Care Act. The government’s refusal to honor its risk corridor obligations represents a negative financial impact of over $20 million.” She went on to point out that as a result, they are facing a challenging financial position that could place partners and member coverage in jeopardy. Therefore, they believe that an “orderly wind down of business” is the most ethical step.