Nonprofit health insurance co-op plans big change

With Health Connections covering 22 percent of exchange customers, announcement could impact thousands

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After posting steep financial losses for the past two years, New Mexico's only nonprofit health insurance cooperative is poised to announce a major change that it says will be positive for co-op members.

Ashanin said, however, that Health Connections will remain part of the state insurance market. "It's all very, very good news, and it's all very exciting," she said.

The future of Health Connections is critical in the state because it is a major insurance provider on the healthcare.gov exchange created by the Affordable Care Act, also known as "Obamacare." The co-op also has expanded to serve public employee groups and retirees.

State Superintendent of Insurance John Franchini said his office would have to approve any merger or partnership deal involving Health Connections but that such a deal would be the best path forward for the co-op and its customers.

"Health Connections is working diligently in making sure they are here into the future," Franchini said. When asked if a merger was in the works, he said, "I hope so."

In its financial filings with the state insurance office, Health Connections reported losses of $18 million in 2016 and $23 million in 2015.

Health Connections is one of 23 health insurance co-ops nationwide created with federal grant money as a result of the Affordable Care Act. The grant money was targeted for markets like New Mexico where insurers were unwilling to provide coverage in many poorer and rural areas.

Many co-ops in other states have financially collapsed.

But Health Connections this year was the second-largest New Mexico provider on healthcare.gov, covering more than 12,000 members, or 22 percent of the exchange market.

Three other insurance companies also offer health plans through the exchange, giving residents of all 33 New Mexico counties a choice of plans and services.

Health Connections has been successful in using stronger case management and preventative care to reduce its costs, especially with regards to hospital admissions, the co-op has said. But that approach has led to a clash with the U.S. Department of Healthand Human Services.

The department says that under its so-called risk corridor formula, Health Connections needs to pay millions of dollars to help offset the costs that other insurance companies incur by covering higher-risk people.

The formula "brutally penalizes" innovators, said Nancy Long, a Santa Fe attorney representing Health Connections in a lawsuit that challenges the formula.

"New Mexico Health argues its premiums are lower than average not because its enrollees are healthier, but because of its innovative practices that punish it. ... That fact makes a mockery of the law whose very purpose was to create innovation and make health-care affordable," she wrote last year in preparation for the litigation.

The Office of the Superintendent of Insurance has granted Health Connections an extension in filing its financial data for 2017.

Franchini said the extension was granted at the request of Health Connections, which said it was in settlement talks with the federal government over the formula payment. The lawsuit is pending in U.S. District Court in Albuquerque.

Franchini said that without the risk corridor payment, Health Connections would be operating with a $66 million surplus. He said his regulators have been discussing a way for Health Connections to move forward and remain in the insurance market despite the uncertainty created by Congress and the White House over health care.

New Mexico exchange rates are expected to increase significantly in 2018. For Health Connections, the typical monthly premium for a 40-year-old nonsmoker in a silver-level plan will rise from $275 to $376 before any federal subsidies are included.

Contact Bruce Krasnow at brucek@sfnemexican.c­om.

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