Utah 10th Obamacare startup to close
By Robert King • 10/27/15 7:41 PM
A lack of federal funding from the Obama administration has caused the 10th taxpayer-funded Obamacare insurance startup to close.
Utah's insurance regulator announced Tuesday that it will place Arches Health Plan in receivership. The reason is due to a small amount of funding from a federal program intended to help buttress insurers that offer plans in the Obamacare marketplaces.
The decision by the Utah Insurance Department allows the regulator to supervise the runoff of its policies. The department says Arches' customers should call their insurance agent or use healthcare.gov when open enrollment starts Nov. 1.
Utah lays the blame on a shortfall from Obamacare's risk corridor program. The program was intended to help Obamacare insurers if they took on too many sick and older Americans.
The program was meant to help mitigate some of the risk of joining the completely new Obamacare marketplaces.
Insurers requested $2.9 billion but only received $362 million in funds, about 12 percent of what they asked for.
The reason is that not enough insurers paid in to the program. Insurers whose profits reached a certain threshold were supposed to provide funding to the program.
The co-ops, created to provide more competition in the Obamacare marketplaces, were particularly vulnerable to the shortfall since they were created back in 2014 and didn't have enough cash reserves to mitigate the lack of funds.
The Centers for Medicare and Medicaid Services, which oversees the co-ops, has said that it expected some would not survive since they are startups. It has pledged to work with co-ops to ensure their stability.
The agency didn't immediately return a request for comment.
Most of the Obamacare-funded startups that have closed have cited the low federal payments as a key reason. The administration gave more than $2 billion to set up the startups, of which only 13 remain.
The latest closure ignited another round of criticism from Republican opponents of the law. The House Ways and Means Committee health subcommittee announced it will hold a hearing Tuesday on the co-op program.
http://www.washingtonexaminer.com/utah-10th-obamacare-startup-to-close/article/2575054
