CareConnect, the health insurance unit of Long Island-based Northwell Health hospital group, is pulling the plug on its four-year-old operations, leaving 125,000 enrollees scrambling to find a new insurer, the company announced Thursday.
The company blamed its failure on the fact that it had to pay $112 million—44 percent of its revenue last year—into the Affordable Care Act’s (ACA) risk-adjustment pool that was designed to prevent insurers from “cherry-picking” healthy customers who are less expensive to cover.
“It has become increasingly clear that continuing the CareConnect health plan is financially unsustainable, given the failure of the federal government and Congress to correct regulatory flaws that have destabilized insurance markets and their refusal to honor promises of additional funding,” said Michael Dowling, Northwell’s president and chief executive officer.
The insurer is the second in the New York State of Health insurance marketplace created under Obamacare to be put out to pasture. Health Republic tanked in 2015.
CareConnect will provide the New York State Department of Financial Services with its plan to withdraw from the marketplace as the insurer begins to wind down over the next year, the company said. It will continue to serve members, patients and providers as well as pay claims throughout the transition period, it added. Northwell will help CareConnect’s more than 200 employees find positions elsewhere in the system.
Dowling noted that despite the death of CareConnect, Northwell will continue in its mission to better manage the health of its patients and slow the growth of health care costs.
“The market challenges confronting us require that we continue to be bold in our thinking,” he said. “Moving forward on our population health journey, we will continue to explore new models of care delivery that will help us accomplish the triple aim of improving the patient experience and the health of our communities, and reducing the per capita cost of care.”