New Jersey insurance regulators have asked a state court in Trenton to place the state’s Consumer Operated and Oriented Plan in rehabilitation by Sept. 19.
The Freelancers Consumer Operated and Oriented Program of New Jersey, which has been doing business as Health Republic of Insurance of New Jersey, is in a hazardous condition, according to Richard Badolato, the commissioner of the New Jersey Department of Banking and Insurance.
The department wants to let the CO-OP stay in operation until the end of the year and then shut down its operations, officials say in a petition for rehabilitation filed today.
Executives of the Newark, New Jersey-based Health Republic have agreed to let regulators put the company into rehabilitation, according to a letter from Tom Dwyer, the company’s interim chief executive officer, that’s included in the rehabilitation petition packet. Dwyer says he is still hoping the management team can find a way to raise enough capital to get the company back into the market in 2018.
Regulators have already shut down two sister companies, Health Republic Insurance of New York and Health Republic of Oregon.
An affiliate of Freelancers Union, a New York City-based group that lobbied for the rights of freelancers for years, and set up benefits programs aimed at freelancers, helped advise the teams that set up the companies using loans from the Affordable Care Act CO-OP program. Organizers used $109 million in program loans to start the New Jersey CO-OP, officials say.
Health Republic of New Jersey is now covering 25,934 people through 14,507 individual and family policies, and 9,016 people through 1,372 small employer group policies, officials say.
The New Jersey CO-OP never earned a profit. It ended 2015 with about $34 million in capital surplus, but it had $14 million in negative capital and surplus as of June 30, officials say.
The Centers for Medicare & Medicaid Services told the company its bill for the ACA risk-adjustment program for 2015 would be $46 million. That’s up from $17 million for 2014, officials say.
The risk-adjustment program is supposed to use cash from insurers with low health-risk scores to help insurers that attract enrollees with high risk scores.
The amount of cash coming from another ACA risk management program, the ACA reinsurance program, which is supposed to protect an individual coverage issuer against bills from enrollees with catastrophic claims, fell to $26 million, from $32 million.