Health Republic Insurance of New Jersey is folding after the state’s insurance commissioner put the Obamacare co-op in "rehabilitation" due to its hazardous financial condition.
The co-op had a liability of $46.3 million under the Affordable Care Act’s risk adjustment program, according to the New Jersey Department of Banking and Insurance. That program was designed to transfer money between insurers in case one insurer had more costly enrollees
"Despite our hard work and growing customer base, the unfortunate necessity for complying with the [Affordable Care Act’s] risk adjustment mandate has put the company under considerable financial strain," said Tom Dwyer, the co-op’s CEO.
The closing will force 35,000 customers served by the New Jersey co-op to find a new plan in 2017. The co-op was initially awarded $107.2 million in taxpayer-funded loans in 2012 and received an additional $1.9 million in 2013.
The New Jersey co-op is the 17th Obamacare co-op to collapse, joining other co-ops that have failed including two in Oregon, one each in Illinois, Connecticut, Arizona, Colorado, Kentucky, Michigan, Nevada, New York, Ohio, South Carolina, Tennessee, Louisiana and Utah, as well as a co-op that served both Iowa and Nebraska.
This leaves only six co-ops in existence of the 23 that were originally created under Obamacare.
Kevin Counihan, a top official for the Centers for Medicare and Medicaid Services told lawmakers in July that six of the seven remaining co-ops are operating on corrective action plans. He could not assure lawmakers that the remaining co-ops would not fail.
A spokesperson from the Centers for Medicare and Medicaid Services said the agency is working with co-ops to provide the best outcome for consumers.
"CMS takes its commitment to both CO-OP consumers and taxpayers seriously," spokesman Aaron Albright said. "Current policyholders are expected to be covered through the end of the year and will be able to shop for a new plan for 2017 during open enrollment beginning November 1."
"CMS and state departments of insurance, which are the primary regulators, are working closely with CO-OPs to provide the best outcome for consumers and taxpayers," he said.