Obamacare...The Good..Bad and the Ugly

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Northwell to close CareConnect

There is now a new casualty regarding the uncertainty as well as some problems inherent in the implementation of the Affordable Care Act: Northwell Health is shutting down its insurer.

CareConnect, the insurer set up by Northwell Health, has decided to shut down, after being denied a portion of its rate request and in the wake of large charges imposed on it through the Affordable Care Act and ongoing uncertainty.

The decision, which comes amid questions as to whether federal subsidies will continue and amid other persistent problems with the Affordable Care Act, is a huge blow to the state’s, and Long Island’s, health insurance market.

“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,” Northwell CEO Michael Dowling said.

The New York State Department of Financial Services issued a statement regarding CareConnect’s decision to “withdraw from the New York health insurance market.”

Department of Financial Services Superintendent Maria Vullo blamed “the repeated actions of the federal government to undermine the Affordable Care Act at this time in the insurance cycle.”

She said CareConnect has decided to “begin an orderly wind down from the market,” but added that “this decision will help Northwell focus on its core mission to deliver healthcare services to New Yorkers.”

Northwell had requested a 29.7 percent hike for individuals, but was granted 23.1 percent, and requested a 19.3 percent small group hike, but obtained 15.5 percent.

“One of the underlying flaws of the law is this flawed financial methodology they use for insurers, which is why so many insurers are getting out of exchanges,” said Terry Lynam, a Northwell spokesman. “That’s what’s causing these premium increases.”

Jason Samel, head of JayMar Insurance, said the decision to close the insurer is going to have a big impact on the state’s and Long Island’s insurance market.

“With over 100,000 enrollees, CareConnect’s exit from the marketplace is going to create havoc for consumers, businesses, and brokers much the same way the shutdown of Health Republic did in the past,” he said. “I am really concerned for our Long Island community.”

Samel called this “an unfortunate pitfall of the Russian roulette” that he said President Donald Trump and the Republican party “have been playing with our healthcare system.”

The announcement came as Modern Healthcare named Northwell Health CEO Michael Dowling the 38th most influential person in healthcare – but named Republican legislators and President Donald Trump toward the top of the list.

Northwell Health earlier said the failure to obtain its full rate hike request compounded uncertainty and problems.

And Northwell Health said that the fact that it had been compelled to pay more than $100 million into what’s known as a risk adjustment pool pushed the insurer into the red.

The Affordable Care Act includes a risk adjustment system designed to compel newer insurers, particularly with healthier patients, to pay money that goes to other insurers.

The problem, Northwell Health had said, was that it was being implemented in a way that essentially imposed a huge levy on it, making it question whether it could continue offering insurance.

Northwell will be submitting a withdrawal plan to the state, but CareConnect operations will continue over the next year as it said it “works with its customers, businesses, and others to help transfer policy holders to other health plans.”

Throughout the transition, CareConnect said it will continue to pay claims and serve members, patients, and providers.

“Many of CareConnect’s more than 200 employees will continue to have jobs during this transition period, and Northwell will assist them in trying to find other suitable positions within the health system,” according to the insurer.

Even after Northwell’s decision, Vullo sought to stabilize the insurance market, saying “New York’s healthcare market remains robust and consumers across New York have real choice of coverage.”

Some other insurers sought to position themselves to serve customers who will be seeking health insurance.

“It’s likely that many of CareConnect’s 120,000 members — particularly those with small business health insurance – may look to Oscar Health as an option,” a spokeswoman for Oscar Health said.

Oscar Health just introduced a new health plan for small businesses, Oscar for Business, and was the only insurer to reduce its premiums for small businesses next year, cutting them by 3.2 percent.

She said the state “will work with CareConnect on an orderly transition to ensure that all of its members know their full options and continue to receive healthcare coverage without interruption.”

Vullo called on the federal government to “end this continued uncertainty, immediately act to protect our markets by fully paying the cost-sharing subsidies for good and not piecemeal.”

She called on the federal government to approve subsidies and faulted it for seeking to reduce the enrollment period, which she said would likely lower the number of people who are insured.

“As much as we regret having to make this decision to withdraw from the market, I continue to believe in the strategy of CareConnect, population health and the benefits that come from value-based care,” Dowling said.

http://libn.com/2017/08/24/northwell-to-close-careconnect/