Thousands of Summit County residents scrambling after health insurer shuts down
Health insurance in the mountains is looking sickly.
The lower-cost insurer Colorado HealthOP was barred from the marketplace because it did not meet state capital-reserve requirements, the Colorado Division of Insurance (DOI) announced on Friday, Oct. 16.
The insurer sued the state for the right to continue selling policies, but, after a closed-door hearing Monday, Colorado HealthOP announced it will begin shutting down.
“That is really bad news for Summit County for a number of reasons,” said Tamara Drangstveit, executive director of the Silverthorne-based nonprofit Family and Intercultural Resource Center (FIRC). “They were the cheapest plans available to folks last year, so everybody is going to see an increase in their health insurance this year.”
The FIRC employs people to offer free enrollment assistance, and, last year, 95 percent of the local residents who enrolled with the nonprofit’s help chose Colorado Health-Op, she said. “It was the only affordable option.”
Colorado HealthOP has about 4,000 members in Summit County — a figure that represents about 14 percent of the county’s full-time, year-round population.
Besides higher monthly premiums, the change will impact insurance tax credits, which help make premiums more affordable for many. The tax credits are calculated based upon the second-lowest silver plan in an area, and Colorado HealthOP was the carrier with the second-lowest Silver premium in many areas throughout the state.
Plus, the insurer closing will mean some of the residents forced to change plans must see new doctors and health-care providers.
“It also comes at a particularly bad time for Summit County because we were just starting to see our uninsured rate go down. We were just starting to see real progress, and I think this calls that progress into question,” she said. “Summit County residents have been burdened with incredibly high costs for insurance for a long time now, and it looks like that trends going to continue.”
‘THE DIVISION HAD TO ACT’
Founded in 2012, Colorado HealthOP is a nonprofit health insurance cooperative that had about 83,000 members as of Sept. 15. About 80,000 of those had individual plans and 3,000 had group plans.
As a co-op, the organization answers to members instead of corporate shareholders, and any revenues that exceed costs are reinvested to benefit members through lower premiums, expanded benefits or other improvements.
Nearly 40 percent of Coloradans who purchased insurance in 2015 through the state marketplace, Connect for Health Colorado, are Colorado HealthOP members.
On Oct. 8, the Centers for Medicaid and Medicare (CMS) announced it would reimburse the nation’s health insurers only 12.6 percent of what they were entitled under the program, or $362 million out of $2.9 billion promised.
Colorado HealthOP was expecting around $16.2 million this year from the risk corridor payments but instead will only receive about $2 million.
According to the DOI, the funding shortfall happened because the risk corridor program included more insurance companies eligible for payments than were required to pay into the program. Plus, many companies underestimated the risk of the new members they took on in 2014 and set their premiums too low.
CMS also was prevented from using other resources to make up this year’s shortfall in the risk corridor program.
DOI Commissioner Marguerite Salazar said, “It is truly unfortunate, but the division had to act now before open enrollment gets started Nov. 1. To delay any longer would undermine the open enrollment process, impacting the entire health insurance market in Colorado and negatively impacting Colorado consumers.”
Current individual and small group Colorado HealthOP policyholders will be covered until the end of their policies, as long as they continue to pay their premiums. For coverage in 2016, HealthOP members will need to choose plans from other insurance carriers.
Individual policy holders will need to choose plans from other insurance providers in the upcoming open enrollment (Nov. 1 through Jan. 31). To ensure coverage starts Jan. 1, and to avoid a gap in coverage, members must enroll before Dec. 15.
Employers with small group coverage purchased through Connect for Health Colorado also will need to select coverage from another carrier when their plans come up for renewal, but small group coverage is not tied to the open enrollment dates.
FIRC, which now has 47 employees, Drangstveit said, bought group insurance through Colorado HealthOP last year and saw a 40 percent decrease in rates from the year before. Those savings could be used to pay two or three additional employees, she said.
Now, the nonprofit will work to raise funds to keep up its current levels of service, she said, but local businesses may be considering whether they can keep offering health insurance, which means people won’t have coverage.
More local residents will seek free help from state-certified brokers and health coverage guides through the long, complex enrollment process that can be frustrating or overwhelming. Plus, the amount of uninsured and underinsured people seeking health care through the area’s only safety net clinic, the Summit Community Care Clinic, will rise.
“They’re buried over there as it is, and this is not going to help,” she said.
Colorado HealthOP members enrolled through Connect for Health Colorado can contact Connect for Health Colorado with questions about renewals and choosing new options by calling 855-752-6749. Consumers with questions about payment of claims by the HealthOP should contact Colorado HealthOP member services at 866-915-6619.
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