Only six of 23 consumer-owned and operated health plans will definitely be available next year following the announced shuttering of Health Republic, an insurance company in New Jersey.
Health Republic announced it will close at the end of this year, leaving 35,000 consumers in the state looking for alternative coverage.
Critics of the Affordable Care Act (ACA), also known as Obamacare, believe the closure of the consumer-owned and operated plan (co-op) is another example of how the act is failing.
Mike Proto, spokesman for the New Jersey chapter of Americans for Prosperity, said his group has been strongly against Obamacare since its enactment.
“A lot of what we are seeing is what we warned people about: rising premiums, promises you will be able to keep your doctor and keep your plan,” Proto recently told Patient Daily. “I think one of the problems with the co-ops is that the administration failed to plan for what might happen if they did fail.”
Health Republic has blamed its closure on what it describes as a “deteriorating financial condition,” largely brought on by a demand to pay $46.3 million under the ACA’s risk adjustment program.
Risk adjustment requires insurers with a healthier enrollment to pay those with sicker and more expensive patients.
Newly established co-ops claim they are at an inherent disadvantage as they face demands for risk-adjustment payments because established insurance companies have more information about their customers.
Maryland’s Evergreen Health co-op has argued that case in a lawsuit against the federal government.
New Jersey Department of Banking and Insurance Commissioner Richard Badolato said the state is working out a "rehabilitation" plan that preserves the carrier's financial assets, so medical providers will be reimbursed for the care they provide consumers for the remainder of the year.
“We will also be assisting individual consumers as they transition to a new plan during the open enrollment period this fall," Badolato told NJ.com. "Similarly, we will work with small employers as they seek replacement plans for their businesses."
Americans for Prosperity believes the failure of so many co-ops speaks to a more fundamental problem.
“I do not believe any government-managed health insurance system works,” Proto said. “We'll continue to see failures -- you are going to see issues. Obamacare is not working. Thirty five thousand people are now scrambling to find a new plan, and there are other companies that have bowed out of the exchanges. People are faced with fewer and fewer options while continuing to pay higher premiums. Obamacare has to be replaced by a patient-centered system, providers in charge, employers to make these decisions themselves. When government gets into health care, costs always go up.”
