Northwell Health announced last Thursday that its insurance subsidiary CareConnect would be shut down and will withdraw from the New York State insurance market for 2018, leaving about 125,000 customers in New York State, including 31,500 in Suffolk County, without a plan.
“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 Michael Dowling said in a press release.
Northwell said in a statement that CareConnect would have been profitable in 2017 if it did not have to pay $112 million into the Affordable Care Act’s risk-adjustment pool. That money represented about 44 percent of CareConnect’s 2016 revenue from its small-group health plan, which provides coverage to businesses with 100 or fewer employers. Next year, according to the statement, it would face similar charges, upwards of $100 million.
Congressman Lee Zeldin (R- Shirley) has been against ACA, also known as Obamacare.
“Obamacare has been nothing short of a disaster for countless hardworking families and our economy,” Mr. Zeldin said in an email. “The system has failed and it’s only going to get worse. Under Obamacare mandates, CareConnect was forced to pay the ACA risk-adjustment pool nearly 50 percent of their revenue due to unreasonable mandates.”
The risk adjustment program was designed to prevent insurers from specifically choosing healthy customers over those who are more expensive to cover. The program requires carriers with healthier insureds to transfer money to carriers whose customers are relatively unhealthy.
Peconic Bay Medical Center in Riverhead is an affiliate of Northwell Health, but officials there said they are optimistic for the future.
“Northwell Health facilities and their physicians accept all commercial insurance, with the exception of Oscar [another health insurance company headquartered in New York City], so the withdrawal of CareConnect should have no adverse impact on our patients,” said a spokesperson from Northwell Health, speaking on behalf of PBMC. “CareConnect customers will have ample time — up to a year, depending on when they enrolled — to find other health plans, so there will be no interruption of their coverage.”
Mr. Dowling said that “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.”
The company said it will keep CareConnect running over the next year as it works with customers and businesses to help transfer policyholders to other health plans, and there is no final date by which everyone must switch.
“Although it does affect a fair amount of people out here on the East End, it wasn’t a huge, huge carrier out here,” said Anthony Cardona, owner and president of Cardona & Company Insurance of East Hampton. “Specifically for the area, it’s not going to be as catastrophic as when Health Republic went under, but it does bring up the question about how limited we are for options out here.”
In 2015, Health Republic, a New York-based insurance provider, shut down and left businesses scrambling for new plans. Health Republic was also created under the ACA but, unlike CareConnect, it was an independent carrier and had a much larger network, while CareConnect was a subsidiary of North Shore LIJ.
“We do have options and we do have solutions, but they are becoming more and more limited,” Mr. Cardona said. “People aren’t going to get left out in the cold, but it just brings the point up over and over again that the cost of health insurance has to be related to the cost of health care. The cost of health care in our country is very expensive.”
Assemblyman Fred Thiele (I-Sag Harbor) called on Congress Monday to take action within the health care system. He said that the closure of CareConnect is proof that “blind partisan recklessness” in Washington is having adverse effects on the East End.
“Congress should get back to work and find bipartisan solutions that correct flaws in the current system without regard to which political party wins or loses,” Mr. Thiele said. “The health of the American people should come first.”
File photo: Peconic Bay Medical Center in Riverhead. (Credit: Times Review)