CONCORD, N.H. – A health insurance cooperative with 37,000 customers in Massachusetts and New Hampshire is shutting down but hopes to reopen as a for-profit company in January.
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Minuteman Health and 22 other small nonprofit insurers were created by the Affordable Care Act to stimulate competition and lower prices, but nearly all of them have since folded. In an announcement Friday, Minuteman blamed a provision of the law that requires insurers with healthier customers to make payments to insurers with sicker customers.
"The risk adjustment program has been highly volatile. It hasn't worked as intended," CEO Tom Policelli said in an interview.
In a federal lawsuit filed last year, the company argued that it has been punished for offering lower-cost products because the risk adjustment payments are based in part on how a company's premiums compare to statewide averages. It said its premiums were substantially lower than average not because its customers were healthier but because its business model focused on keeping costs low and because its members were more likely to purchase less-expensive plans.
Policelli said the company has had to spend about a third of the amount it collects in premiums on risk adjustment payments, and for 2018, was seeking to increase premiums by 30 percent. Further, as a cooperative, the company was not allowed to expand beyond the individual and small-group market.
"We're forced to be in the penalty box, basically," he said.
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Minuteman started in Massachusetts and later expanded to New Hampshire, where it has about 27,000 customers and has the second-largest share of the individual market among four companies offering such plans under the Affordable Care Act. In Massachusetts, Minuteman is one of the smaller players among 11 companies, said insurance division spokesman Chris Goetcheus.
Minuteman is the second co-op to stop offering plans in New Hampshire. Maine's Community Health Options pulled out for 2017 to focus on Maine, and recently announced it had achieved a surplus after two years of losses.
Nationally, competition in many markets has dwindled to one insurer, or in some cases, none. Insurers are retreating from some markets or charging a lot more to stay in others. And Republicans in Washington are hoping to get their bill scuttling much of Barack Obama's health care overhaul through the Senate next week.
"Today's announcement by Minuteman Health is more clear evidence that Obamacare has failed and that our nation's health care system demands reform," said New Hampshire's Republican Gov. Chris Sununu. "This environment of instability was created by Obamacare's costly regulations and taxes that are causing premiums to sky rocket. Washington must work together to end the partisan gridlock and move reform forward otherwise more Granite Staters are likely to be negatively impacted.
Policelli said the new company, Minuteman Insurance, is committed to staying in the exchanges in Massachusetts and New Hampshire and to continuing its model of partnering with low-cost, high-quality providers. He declined to respond to Sununu's comments but said there's no question the risk adjustment program has created instability and increased premiums. Beyond that, the company considers itself "purple" when it comes to politics, he said.
"There were some good ideas and some bad ideas in the ACA, and I think there are good ideas and bad ideas in the new Republican version being kicked around," he said. "I don't think anyone has a monopoly on genius."
Current Minuteman Health members will see no interruption in coverage and providers will be fully paid through the remainder of their policies. According to the New Hampshire Insurance Department, the new company would need to be authorized to write insurance in Massachusetts and New Hampshire before August 16 in order for it to be eligible to offer insurance on New Hampshire's federally facilitated exchange and the Massachusetts Connector as of January 1, 2018.
Open enrollment is Nov. 1 to Dec. 15.