Care Connect, Northwell Health’s health insurance subsidiary, will be be shut down, the New Hyde Park-based hospital system announced today.
“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,” Northwell president and CEO Michael Dowling said in a statement.
CareConnect would have been profitable in 2017 if it were not for the $112 million it had to pay into the Affordable Care Act’s risk-adjustment pool – amounting to about 44 percent of CareConnect’s 2016 revenue from its small-group health plan (businesses with 100 or fewer employees), Northwell said. CareConnect would be facing another risk-adjustment payment of more than $100 million in 2018 from its 2017 small-group revenue.
“I greatly appreciate the positive steps taken by the New York State Department of Financial Services earlier this year to reduce the financial impact of the risk-adjustment program on CareConnect and other small insurers writing individual and small-group health policies. However, the continuing uncertainty in Washington about the future of the ACA, intractable regulatory problems and the federal government’s broken promise of so-called `risk-corridor’ payments to insurers provide us with no viable path to profitability in the foreseeable future,” Dowling said.
“The ACA’s risk-adjustment program was designed to prevent insurers from “cherry-picking” healthy customers who are less expensive to cover. It attempts to accomplish this by requiring carriers with particularly healthy customers to transfer money to carriers whose membership is relatively unhealthy. However, defects in the small-group program have resulted in New York’s smaller, more-innovative insurers like CareConnect to subsidize larger competitors, which have more in depth medical histories on their customers than start-ups that have been in business for less than four years,” Northwell said in a press release.
Northwell will be submitting a withdrawal plan to Department of Financial Services, but CareConnect operations will continue over the next year as the company works with its customers, businesses and others to help transfer policy holders to other health plans, Northwell said.
Throughout the transition, CareConnect will continue to pay claims and serve members, patients and providers. Many of CareConnect’s more than 200 employees will continue to have jobs during this transition period, and Northwell will assist them in trying to find other suitable positions within the health system.
“As much as we regret having to make this decision to withdraw from the market, I continue to believe in the strategy of CareConnect, population health and the benefits that come from value-based care,” Dowling said.
CareConnect was established in the fall of 2013 as New York State’s first provider-owned commercial insurance company.
“CareConnect has delivered on its promise to offer consumers affordable access to excellent care,” Dowling said. “I am proud of what we have built and the value we bring to individuals and businesses.” In addition to the company’s significant enrollment, 96 percent of businesses that chose CareConnect in 2016 rated the company as either “excellent” or “good.”
“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.”