https://www.bloomberg.com/news/articles/2017-08-24/new-york-hospital-system-shuts-obamacare-unit-after-lossesby Zachary Tracer
August 24, 2017
New York State’s biggest hospital system plans to stop selling Obamacare plans, blaming a costly plank of the law and uncertain prospects for a fix amid a wider Washington brawl over health care.
Northwell Health said in a statement that it will wind down its four-year-old CareConnect Insurance Co. business over the next year, after it suffered financial losses linked to a program designed to steady the exchanges where consumers can buy coverage.
CareConnect said new insurers like itself were disadvantaged by an Affordable Care Act program called risk adjustment, because they had less information about their customers. The program is designed to transfer money from insurers with healthy customers to those with sick ones and relies on insurers to assess their own members.
The company was required to pay out large sums under the program, fueling a $156.6 million loss in 2016, up from $31.8 million a year earlier, according to regulatory filings. New York’s insurance regulator is making changes to the program for 2018 to limit how much insurers can pay in or receive. CareConnect said it would have been profitable this year if it were not required to pay $112 million into the risk-adjustment program.
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