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November 7, 2016

Wade to make call on HealthyCT's future

HBJ File Photo Insurance Commissioner Katharine Wade.

A Connecticut judge has approved the next step in health insurer HealthyCT uncertain future.

The Wallingford-based company is now under an order of rehabilitation, signed Nov. 1 by Hartford Superior Court Judge Antonio Robaina.

The Connecticut Insurance Department (CID) placed HealthyCT under administrative supervision on July 1, after it learned the insurer would be required to pay $13.4 million to an Obamacare risk adjustment program, putting the insurer in “hazardous financial condition.”

The order last week puts CID Commissioner Katharine Wade in the position of rehabilitator, meaning she “may take such actions as she deems necessary or appropriate to reform, revitalize, rehabilitate or run-off HealthyCT.”

However, if Wade determines that rehabilitation efforts would “substantially increase the risk of loss to creditors, policyholders or the public, or would be futile,” she may ask the court to approve a liquidation order, according to court documents.

HealthyCT’s financial picture provides some indication that Wade may opt for the latter.

The order notes that HealthyCT’s assets and reserves are projected to be inadequate to cover its contractual obligations. The nonprofit “CO-OP” insurer booked a net loss of $19.3 million between Jan. 1 and Aug. 31, and its capital and surplus has also dipped to a negative $3.5 million.

The company “has no realistic access to additional capital to improve its financial condition,” according to the order, because it already received federal loans totaling approximately $128 million, and because as a nonprofit it’s not allowed to sell stock.

In addition to the risk adjustment payment, HealthyCT, along with many other CO-OP insurers across the country, also suffered from Congressional action that withheld revenues under Obamacare’s risk corridor program. As a result, the Centers for Medicare and Medicaid Services withheld $20.3 million in payments to HealthyCT as of June 30, according to court documents.

HealthyCT individual customers will continue to receive coverage through the end of 2017, as long as they continue to pay premiums, while certain group policies will roll over into the first half of 2017. After those points in time, customers would need to find a new health insurer.

The rehabilitation order prohibits healthcare providers from seeking payment from HealthyCT customers for covered care provided before Nov. 1.

Any provider who was contracted with HealthyCT as of Nov. 1 will be required to continue to provide care to HealthyCT policy holders.

Correction: The original version of this story inaccurately described when certain HealthyCT customers would have to change insurers. For individuals, coverage will cease at the end of 2016, while some group plans may continue on into 2017, depending on when contracts were signed.

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