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Obamacare Co-Op Now in State Receivership After Exiting Obamacare Exchanges

State commissioner said co-op had thin capitalization, action done to protect policyholders

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August 7, 2017

Minuteman Health of Massachusetts and New Hampshire announced in June it was planning to exit the Obamacare exchanges next year, but now the co-op is being placed in state receivership due to a lack of capital.

The Massachusetts Commissioner of Insurance announced that the Obamacare co-op is now under its control as the Supreme Judicial Court granted the commissioner receivership. The commissioner said Minuteman Health's capitalization is very thin, and this action was done to protect policyholders and health care providers.

Even though the commissioner says the co-op has limited capitalization, it notes it is still solvent and has enough funds to pay all of its insurance claims.

In June, the co-op announced it was planning Obamacare exits and was planning to organize a new company, Minuteman Insurance Company. The commissioner confirmed this, saying that some of Minuteman Health's directors and officers are attempting to organize a new health insurer in Massachusetts.

The co-op also cited issues with Obamacare's risk-adjustment program and some of the law's mandated rules on co-ops. The risk-adjustment program was designed to shift money away from insurers with healthier enrollees to those with sicker enrollees. The co-op said the program has not worked as intended and made it difficult to predict their obligations.

"Minuteman Health is subject to certain co-op rules that limit Minuteman Health's ability to adjust its business model to mitigate the impact of the dysfunctional risk adjustment program," the company stated in June.

"The program also unfairly penalizes issuers like Minuteman Health that are small, low cost, and experience high growth," the co-op said. "The significant negative impact from risk adjustment has been the principal driver of a reduction in Minuteman Health’s surplus and capital over time."

If Minuteman Health decides to create a new health insurance company, it will not be subject to these rules.

"Offering our members a quality, more affordable coverage option has been Minuteman's mission from day one," said Tom Policelli, CEO of the co-op. "We want to continue that mission in 2018 and beyond through the new company we are currently working to organize. Forming Minuteman Insurance Company will allow us to address numerous federal restrictions and work to make our coverage available to more people."