CareConnect insurance company is pulling out of ObamaCare due to considerable losses, it announced on Thursday. Formed in 2013, the health insurer enrolled 14 percent of firms in NY’s small group market, and 8 percent of customers in the individual ObamaCare market. Most of those customers are located in Long Island and New York City. CareConnect is a division of Northwell Health, formerly known as North Shore-Long Island Jewish Medical Center network. Northwell is the largest health care provider in NY State, with 22 hospitals and 550 outpatient facilities.
CareConnect said it had to pay $112 million into a risk insurance pool last year. The pool was intended to prevent insurers from accepting only younger and healthier customers, by giving a boost to insurers who took on a higher number of risky clients, who are frequently money-losing. Northwell Health blames their pullout on a flawed provision in the Affordable Care Act and Washington’s failure to fix it. As reported by the NY Post, the payments CareConnect made to the risk adjustment pool accounted for 44 percent of its entire 2016 revenue. Next year, if the company continued, it would be forced to pay another $100 million to the pool. Northwell will be submitting its withdrawal plan to the state’s Department of Financial Services. It will continue operations for the next year to give customers an opportunity to find other plans.
“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 Northwell CEO Michael Dowling.
“However,” Dowling added, “the continuing uncertainty in Washington about the future of the ACA, intractable regulatory problems and the federal government’s broken promise of so-called ‘risk corridor’ payments to insurers provide us with no viable path to profitability in the foreseeable future.”
Financial Services Superintendent Maria Vullo responded to the withdrawal saying, “We recognize that this decision will help Northwell focus on its core mission to deliver health care services to New Yorkers.” She insisted NY still has plenty of coverage choices.
NYC recently announced that health insurances rates will increase an average of 14 percent for customers in the individual market, and more than 9 percent for the small group market, heralding the second consecutive year of substantial price increases.
By: Shmuel Rachelov