This has long been a concern for our agency as the health insurance industry is incredibly difficult to navigate and finance. We will work with everyone affected by this situation to find alternatives.
The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), took action against the Colorado Health Insurance Cooperative, more commonly known as the Colorado HealthOP, preventing it from selling insurance for 2016 on the state’s health exchange, Connect for Health Colorado. Colorado consumers will not be able to buy new HealthOP coverage or renew existing plans for 2016, for individuals or small groups, on Connect for Health Colorado. This move comes in time to ensure that HealthOP members can enroll in new plans during the upcoming open enrollment without a disruption in coverage.
The DOI took this action as the financial viability of the HealthOP came into question after learning it would receive considerably less money than expected from a federal, risk-based reimbursement program know as “risk corridor.” Earlier this month, the Centers for Medicaid and Medicare (CMS), announced it would only reimburse the nation’s health insurers 12.6% of what they were entitled under the program – only $362 million out of $2.9 billion promised. Colorado HealthOP was expecting around $16.2 million this year from the risk corridor payments, but instead will only receive about $2 million.
Because of the shortfall in funds, the HealthOP does not meet the State’s minimum capital and surplus requirements. The State requires insurance companies to maintain a certain level of capital and surplus to act as a rainy day fund should the company have a number of very sick people with very high cost claims. Without enough money in that rainy day fund, a company would not be able to pay the claims for its members. The DOI has had the HealthOP under supervision since February, during which time it continued to meet the capital and surplus requirements. However, not receiving the risk corridor payment means the Colorado HealthOP’s rainy day fund will be completely wiped out, and is in fact expected to be in the negative by $34 million by the end of the year.
“Our decision is a direct result of this shortfall by CMS, and I sympathize with the HealthOP, but the Division has requirements and it has to protect consumers,” said Insurance Commissioner Marguerite Salazar. “It is a key function of the DOI to make sure that insurance carriers are financially stable enough to pay the claims of their policyholders. While Colorado HealthOP can continue to pay claims for the rest of 2015, we cannot allow it to sell or renew policies on the exchange for 2016.”
Commissioner Salazar added, “It is truly unfortunate, but the Division had to act now, before open enrollment gets started November 1st. To delay any longer would undermine the open enrollment process, impacting the entire health insurance market in Colorado and negatively impacting Colorado consumers. And it would have been even more costly to consumers if this action had to take place once 2016 started.”
What does this mean for Colorado HealthOP members?
As of September 15, the HealthOP had 82,785 members, with 79,877 under individual policies, while 2,908 are covered under small group policies. Current individual and small group Colorado HealthOP policyholders will continue to be covered until the end of their policies, as long as they continue to pay their premiums. But for coverage in 2016, HealthOP members will need to choose plans from other insurance carriers. Members with individual policies must choose another carrier during the upcoming open enrollment for individuals, Nov. 1 – Jan. 31. Consumers can select coverage through Connect for Health Colorado, or off-exchange, but are reminded that tax credits are only available when purchasing coverage through Connect for Health.
Consumers should know that under Colorado law, they will NOT be responsible for payments to providers that should be paid by the HealthOP, as the company will continue to pay claims for current members. If for some reason, the HealthOP is unable to pay claims, the Colorado Life & Health Insurance Protection Association, a nonprofit organization that assists Colorado residents with health insurance policies by insurance companies in financial difficulties, would step in and pay claims. It is for situations such as this that the Association was created.
A representative of the association, Chris Chandler, said, “If called upon, the Life and Health Insurance Protection Association is prepared to provide a safety net for members and ensure the payment of claims consistent with its statutory mission of protecting policyholders.”
Colorado HealthOP members must still pay their premiums for their coverage to remain effective. They will still be required to pay for their share of charges such as deductibles, co-payments and co-insurance, as required by their plans.
What does this mean for the 2016 open enrollment?
For the 2016 open enrollment for individual health insurance, Colorado HealthOP plans will not be available to buy or renew through Connect for Health Colorado. HealthOP plans will also not be available for small employers to buy or renew through Connect for Health’s SHOP program
Removing Colorado HealthOP from the exchange’s 2016 offerings has an impact on all of the information and calculations for open enrollment. This will also impact the advance premium tax credits (APTC) that help make insurance more affordable for many. APTC is based upon the second-lowest Silver plan in an area, and since the Colorado HealthOP was the carrier with that second-lowest Silver premium in many areas throughout the state, this decision will impact those calculations. The Division is revising its figures for the number of carriers and plans available and the statewide and geographic area average premiums.
The approved plans and premiums for 2016 should be available from the DOI in the coming days.
As with every open enrollment, Colorado consumers should review all of their health insurance options, and are free to explore all of the plans available in their area to determine the best fit for their health and financial needs. While Colorado consumers generally will be able decide between staying with their current plan or moving to a different plan, Colorado HealthOP members MUST choose a plan from a different insurance company for 2016.
-Taken from Connect for Heath Colorado