HealthyCT crumbles under ACA risk-adjustment charge

Connecticut’s co-op insurer HealthyCT is winding down its business after it was hit with a massive Affordable Care Act risk-adjustment charge, as the state’s insurance regulator said the plan was financially unstable because of the required payments.

The Connecticut Insurance Department placed HealthyCT under an order of supervision last week, preventing the insurer from writing new business or renewing policies. It pro- vides insurance for 40,000 people in the state, with 13,000 on individual plans and 27,000 on employer plans.

The move comes less than a week after the CMS said HealthyCT owed $13.4 million in risk-adjustment obligations. The CMS’ permanent risk-adjustment program is supposed to spread insurance risk among all ACA insurers and prevent companies from covering only the healthiest members.

“It became evident that this risk-adjustment mandate would put the company under significant financial strain,” said Katharine Wade, the state’s insurance commissioner. “This order of supervision provides for an orderly runoff of the company’s claim payment under close regulatory oversight.”

Some companies have voiced concerns that the risk-adjustment model favors larger insurers, and smaller plans are disadvantaged because their membership bases look healthier due to a lack of claims data.