Health Republic Insurance, one of two nonprofit insurers created in Oregon under President Barack Obama’s health care law, announced that it is shutting down.
Health Republic will continue to pay claims through the rest of the year but won’t sell policies for 2016, the company said. The 15,000 individuals and 800 small businesses that get insurance through Health Republic will have to turn to another insurer.
The company blamed a reduction in federal payments that are supposed to help insurers smooth out the risk of taking on newly insured patients under the Affordable Care Act. CEO Dawn Bonder said the company assumed it would get those payments when it set premiums, but due to a change made last year by Congress, insurers are receiving less than 13 percent of the money they’d expected.
For Health Republic, that represented a hit of $20 million for 2014 and 2015.
Co-ops like Health Republic were created as part of a compromise in the Affordable Care Act to compete with for-profit insurance companies.
At least seven other co-ops around the country have shut down, many of them citing the same formula change that tripped up Health Republic.
“I think it’s sad that we won’t get to be part of trying to change the health are dynamic in Oregon and bring some new and creative ideas to the table,” Bonder said. “Overall, that’s a loss for all Oregonians.”
Oregon’s Health Co-op, the state’s other nonprofit insurer, will continue operating next year, CEO Phil Jackson said. The organization was less affected by the federal risk formula change because it had fewer members — and therefore less money at risk. It also built its budget around an assumption that it would get just 20 percent of the risk payments, he said.
“We’re in very good shape heading into next year,” Jackson said.
Enrollment begins Nov. 1 for insurance subsidized under Obama’s health care law.
Oregon Insurance Commissioner Laura Cali said in a statement that Health Republic must submit a plan to wind down operations. She said regulators will work with the company to ensure its customers are protected.