One of the last four survivors of an Affordable Care Act (ACA) health insurer creation program is preparing to die at the end of the year.
The board of New Mexico Health Connections announced Tuesday that the carrier will continue serving enrollees through the rest of this year but will end operations Jan. 1, 2021.
Marlene Baca, the chairman of New Mexico Health Connections’ board, said, in a comment included with the shutdown announcement, that claims have been too high, enrollment growth has been too slow, and capital has been too scarce for the carrier to stay in business.
“Rather than spending resources on next year’s uncertain market, we would rather make sure we protect our current members,” Baca said.
New Mexico Health Connections is working with the state’s Office of Superintendent of Insurance and the federal Centers for Medicare and Medicaid Services to make sure that it meets all deadlines and fulfills obligations to current members, Baca said.
Because New Mexico Health Connections is closing voluntarily, it can ensure that enrollees can continue to see their plan doctors ,and that claims will continue to be paid under the terms set forth in plan documents at the beginning of the year, according to New Mexico Health Connections.
“As always, members will need to pay monthly premiums in accordance with plan rules for their coverage to remain in effect for 2020,” the carrier said.
New Mexico Health Connections is based in Albuquerque, New Mexico.
In 2018, the carrier had about 17,000 individual coverage enrollees and was the second biggest player in the New Mexico individual major medical market, after Molina Healthcare, according to data compiled by the Henry J. Kaiser Family Foundation.
Russell Toal, the New Mexico insurance superintendent, confirmed in a statement that New Mexico Health Connections enrollees will be able to keep their coverage until the end of the year and have service claims paid.
New Mexico’s Individual Market
Many New Mexico residents with individual health coverage get their health coverage through BeWellNM, a state-based Affordable Care Act public exchange program, which started the year serving about 43,000 people.
“Even with the departure of Health Connections, this fall New Mexico will have more health insurers offering plans in the marketplace than ever before,” Toal said in the comment.
Rates appear to be on track to remain stable throughout the state, Toal said.
Individual major premiums in New Mexico average about $322 per month, compared with a national average of $403 per month, according to ValuePenguin.com.
The Affordable Care Act CO-OP Program
The drafters of the Patient Protection and Affordable Affordable Care Act, one of the two laws in the Affordable Care Act package, formed the CO-OP program in an effort to increase the level of competition in the private health insurance market, by providing startup loans for nonprofit, member-owned carriers.
PPACA, and the federal regulations implementing PPACA, prohibited existing health insurers —including the existing member-owned, nonprofit health carriers — from starting or controlling CO-OPs.
Federal rules also prohibited CO-OPs from selling ownership stakes to other entities. Those restrictions limited the CO-OPs’ ability to borrow money.
Originally, the CO-OPs were supposed to benefit from subsidies and risk management programs the ACA set up in an effort to lure health insurers into the ACA public exchange system.
The CO-OP program started out with strong support from Sen. Max Baucus, D-Mont., and other moderate Democrats in those Senate. When those senators left office, and Republicans gained control of the Senate, CO-OPs lost any ability to persuade Congress to ease the funding and ownership rules.
Republicans in Congress opposed efforts to update or increase funding for the ACA subsidy and risk management programs, and officials in the administration of former President Barack Obama made little effort to support the CO-OPs.
By late 2015, because of ACA public exchange startup problems, company-specific startup problems, and ACA subsidy and risk management program problems, a majority of the 23 ACA CO-OP carriers were dead, or dying.
In New Mexico, one of the founders of New Mexico Health Connections, Dr. Martin Hickey, left to help start True Health New Mexico, a nonprofit, physician-led health carrier that originally was founded to assume responsibility for New Mexico Health Connections’ group plans. True Health now serves individual consumers as well as groups, with Hickey as its chairman. The carrier has goals similar to those of New Mexico Health Connections but operates outside of the ACA CO-OP program funding and ownership constraints.
When New Mexico Health Connection shuts down, the three remaining CO-OPs will be Maine Community Health Options, Common Ground Healthcare Cooperative of Wisconsin, and Mountain Health CO-OP, which serves people in Idaho, Montana and Wyoming.
— Read New Mexico Carrier Sues Over Feds’ ACA Risk-Adjustment Move, on ThinkAdvisor.