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CareConnect Withdraws from NYS Market

CareConnect today has announced their intent to withdraw from the NYS 2018 market. The ACA Risk Adjustment Program was penalizing CareConnect again $100 Million for 2018 after a $112 million tax in 2017.

The problems CareConnect was facing were not new and was covered in last month blog. This problem has bipartisan recognition and Cuomo Administration Asks Feds for ‘Immediate Changes’ to Risk Adjustment Program. While this tax or “risk adjustment penalty” was intended to increase competition it is blamed as the single largest bankruptcy cause for the 12 of 16  Obamacare Co-Ops such as the Health Republic of NY and for start-ups like Oscar and CareConnect.

The formula used to calculate payments in the risk-adjustment program has been criticized for unfairly favoring larger plans with more claims experience. Smaller companies that sell on the ACA’s exchanges have said they don’t have as many claims data, and therefore their membership base looks healthier than it is. In a twisted way, the young companies in need of help were actually subsidizing mature Insurers with legacy data systems.

Who is CareConnect?

CareConnect is a physician/hospital-owned Insurer by Northwell Health also formerly known as North SHore LIJ.  Careconnect manages the health of 400,000 individuals, including 125,000 customers.  Outside of the risk adjustment penalty the Insurer was managing population health and would have posted a profit.  Their past rate increases were single digits.

Sadly, this is a tremendous consumer market hit.  Their growth was predicated on delivering excellence of care while still mindful of consumer affordability, see chart below.  Not only were they on average 20-30% less expensive but their benefits were typically enhanced.  Example:  A Tradition Gold plan member would NOT have a deductible nor coinsurance for surgeries and hospital stays at a time when all competing Gold plans did.

Regrettably, no State appeal has been victorious as of yet.  With logger-head federal conflicts in Government today on repairing Obamacare flaws the victims will once again be the middle-class consumer.

See Press release:

CareConnect Leaving NY Market 2018CareConnect Individual rates

Next Step:

Please sign up for the Sept 13th webinar below on CareConnect Exit & Next Steps for Your Group.

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