Emily Burchfield knew that with a 1-year-old daughter, another child on the way and her own business, she’d be busy this year.
But she didn’t realize that one of her biggest tasks would be scrambling to find new health insurance before her insurer, Land of Lincoln, shutters. She’s also grappling with the fact that she won’t get credit for the money she’s already paid toward her deductible and out-of-pocket maximum with Land of Lincoln when she switches insurers in October — just two months before her baby is due.
“I’m just really still so shocked that that’s not considered illegal,” said the 39-year-old psychotherapist from the Lincoln Square neighborhood. “It’s going to be a huge financial burden especially given the fact my partner is unemployed.” Her partner suffered a stroke last year, she said.
About 49,000 other Illinoisans, who also have Land of Lincoln, are in similar situations. But Illinois is not the first state where a so-called co-op — a nonprofit health insurer created under the Affordable Care Act and offered on state insurance exchanges — has failed before the end of the year. And those other states might hold lessons for how Illinois could potentially save Land of Lincoln members from having to pay down two deductibles in one year.
In New York and Oregon, state regulators persuaded the remaining insurers to credit co-op customers for what they already had paid toward their deductibles. The Illinois Department of Insurance has asked Illinois insurers to do the same, though some say the chances insurers here will agree to that are slim.
Spokespeople for Blue Cross Blue Shield of Illinois and Harken Health, a subsidiary of UnitedHealthcare, confirmed that the Illinois Department of Insurance has reached out to them.
Dana Holmes, a spokeswoman for Blue Cross Blue Shield of Illinois, said this week that as far as she knew, the insurer had not yet made a decision on the department’s request that it credit Land of Lincoln members for money already paid toward their deductibles. When asked if Harken had made a decision on the request, spokesman Jeff Shoemate said in an email, “We are not in a position to discuss details of the conversation.”
Rohan Hutchings, a spokesman for Coventry Health Care of Illinois and Aetna, said in an email it would be “inappropriate to comment” on the issue as Aetna re-evaluates whether to continue offering plans on exchanges in 15 states. Spokespeople from UnitedHealthcare and Humana didn’t respond to requests for comment by deadline.
Illinois Department of Insurance spokesman Michael Batkins said in a statement that the department is in “continued discussions with issuers in hopes of relieving the burden on policyholders as much as possible.”
But the Illinois Department of Insurance does not have the power to force other insurers to count cash already paid toward deductibles, he said.
That, however, didn’t stop New York from working with its insurers to try to credit co-op members for what they had already paid.
New York’s co-op, Health Republic, ceased covering more than 210,000 members on Nov. 30, 2015. Like Illinois, New York also didn’t have the power to force insurers to credit co-op members for their deductible payments. But all of the insurers left on the exchange in New York agreed to do so, said Richard Loconte, a spokesman for the New York State Department of Financial Services.
“This was something I think the insurers recognized was a good thing,” Loconte said. He also pointed out that New York insurers only had to cover the co-op members for a month.
Insurers in Oregon also agreed to credit co-op members for their past deductible and out-of-pocket max payments when Oregon’s Health Co-op stopped coverage at the end of July, said Stephanie Ficek, a spokeswoman for Oregon’s Department of Consumer and Business Services, in an email.
One Oregon insurer refused to honor payments already made toward out-of-pocket maximums, prompting the state’s Division of Financial Regulation to order it to do so. That insurer now intends to honor those out-of-pocket max payments, Ficek said.
Despite Oregon and New York’s success, some aren’t sure that Illinois will be able to persuade insurers here to pick up the slack.
“Unfortunately, it’s just hard to see a path forward,” said Kathy Waligora, director of EverThrive Illinois’ health reform initiative. “The Department (of Insurance) has actually been working very hard on this and I think they really wanted to find a way forward but their authority is limited.”
Consumer advocates have been talking with the department and insurers. Waligora said she’s heard insurers say it would be difficult to cut Land of Lincoln members a break on deductibles because they’ve already proposed new rates for next year based on their expected expenses before Land of Lincoln collapsed.
Insurers also have argued that they’ve already suffered their own losses on the exchange, said Stephani Becker, a senior policy specialist at the Sargent Shriver National Center on Poverty Law.
“It’s a really unfortunate situation,” Becker said. “It seems like this is the perfect storm of bad events for Land of Lincoln members.”
Waligora said New York and Oregon are different from Illinois in a number of ways. She noted, for example, that New York regulators may be able to be aggressive with insurers because of the level of authority they have over them.
But Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, noted that states always have some leverage with insurers.
“It’s just a question of to what extent do they want to use it,” Corlette said.
Whether a state department of insurance can persuade insurers to pick up co-op members’ deductible payments can also depend on a state’s attitude toward the Affordable Care Act and how activist of a role a department wants to take, said Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation, a private foundation dedicated to improving health care.
If state leaders dislike the Affordable Care Act they might be less likely to try to push other insurers to extend credit for deductible payments to former co-op members, she said. Also, many insurers don’t have the warmest feelings toward co-ops, which they may partially blame for pushing down prices in the exchanges, she said.
The nonprofit co-ops were created under the Affordable Care Act, and partly supported by federal loans, to create competition in the individual insurance exchanges.
Many insurers have been losing money on the exchanges, but the co-ops have been especially hard-hit. Only seven co-ops are left of the original 23 across the country.
Among other things, insurers were supposed to receive so-called “risk corridor” payments from the federal government to help offset their losses during their first few years. But Congress passed spending bills that kept insurers from receiving the level of payments they had expected. For 2014, insurers asked for $2.87 billion in risk corridor payments but only got $362 million.
Also, co-ops have struggled with Obamacare’s risk adjustment program, under which insurers with healthier customers are supposed to pay money to insurers with sicker customers. The idea was to help insurers with sicker members and deter insurers from seeking out only healthy customers. In reality, however, co-ops often have ended up paying money to big insurance companies, said John Morrison, founder and past president of the National Alliance of State Health Co-ops.
“You’re making David write a huge check to Goliath that puts David out of business,” Morrison said.
A number of other factors also contributed to the demise of co-ops around the country, leaving many Americans, like Land of Lincoln members, in precarious situations.
Lincoln Square writer Paige Worthy already has found another plan on the exchange to tide her over between when Land of Lincoln closes and the new year begins. But it doesn’t include her preferred doctors, and she doesn’t want to put more money toward a deductible.
Worthy, 33, describes herself as relatively healthy and simply hopes not to use any medical services from October through December. She purchased the plan in case of a medical emergency.
“I am praying for wellness (in) late fall, early winter,” Worthy said. “I feel like I’m one of the lucky ones.”
Read more at the original source: Will Land of Lincoln members really have to pay deductibles twice?
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