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In Illinois, about 49,000 people must find coverage after state regulators last week ordered Land of Lincoln Mutual Health Insurance Co. to close in the face of steep losses.
For those consumers, enrolling in new plans mid-year means restarting deductibles and out-of-pocket maximums, and potentially losing access to current doctors — a predicament that the Illinois Department of Insurance acknowledged late last month could cause “extreme financial harm.”
Land of Lincoln’s troubles mirrored those of other insurance co-ops created under President Barack Obama’s signature health reform law.
. . .
After a slow start in 2014, Land of Lincoln grew rapidly in 2015, finishing the year with more than 35,000 individual policyholders and about 15,000 members in small and large employer plans. That growth, coupled with higher-than-expected claims, caused it to lose $90 million in 2015 and more than $17 million through May 31.
It wasn’t just miscalculating claims, though. Provisions in the health law, coupled with later policy decisions, caused many co-ops to fail, according to a study in December 2015 by the Commonwealth Fund.
For example, insurers that faced significant losses were supposed to receive payment from the government to cover the claims they couldn’t afford to pay.
To pay for these losses, the government collected from insurers who earned significant profits. According to the Illinois insurance regulators, Land of Lincoln is owed more than $70 million in these payments.
Yet, at the same time, Land of Lincoln owes $31.8 million to regulators for another type of risk adjustment payment designed to help offset losses at insurance companies with sicker and costlier members.
State insurance regulators sought unsuccessfully to block that payment to save the company from being liquidated.
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[boldface added - DD]
Ref: St. Louis Post-Dispatch
DonDiego wonders where did all that money go ? ? ?
