Citing massive losses, the largest medical insurer in New York state announced Thursday it is pulling out of the Obamacare marketplace.
Northwell Health, formerly known as North Shore-Long Island Jewish Medical Center network, attributed its $112 million in losses in 2016 as its reason for shutting down CareConnect. The spinoff insurer enrolls 8 percent of state customers in the Obamacare market — mostly on Long Island and in New York City.
The company is the state’s largest health care provider, with 22 hospitals and 550 outpatient facilities. Payments it was forced to make to a risk adjustment pool as part of its Obamacare responsibilities accounted for 44 percent of its expenses last year. It was on track to have to make another risk adjustment payment of $100 million next year.
“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,” said Northwell CEO Michael Dowling.
The risk pool is payments required by larger insurers to cover losses by smaller insurers who lose money by covering older and sicker patients. The bailout payment was enforced by the Obama administration but Congress has sued, saying they never put it into the 2010 law.
Northwell will be submitting its withdrawal plan to the state Department of Financial Services and will continue operations over the next year to give customers time to transfer to other plans.
The last time an Obamacare insurer collapsed in New York was when Health Republic closed down in 2015.