The New Jersey Department of Banking and Insurance has ordered Health Republic Insurance of New Jersey to stop offering coverage in 2017. The order will make the company the 17th of the original 23 Consumer Operated and Oriented Plans (co-ops) established under the Affordable Care Act to cease operation.
As often discussed on this blog, the co-op program was crippled largely by the failure of federal programs intended to ensure the fledgling companies' survival. The government's inability to make "risk corridor" payments that were due to all co-ops, in some cases combined with "risk adjustment" liabilities imposed on those co-ops (like Health Republic) with generally healthier insureds, have caused one co-op after another to be placed under administrative supervision and/or enter insolvency proceedings. Even aside from these impediments, most co-ops have struggled to compete against larger, better-funded insurers in their states.
Health Republic lost almost $60 million in the first six months of 2016, leaving it insolvent; however, the state insurance department hopes that the company can resume selling policies in 2018 if its financial condition improves. In the meantime, with the impending departures of Oscar Health and Oxford Health Plans from the state marketplace, New Jersey consumers will have a choice of only two insurers -- Horizon Blue Cross Blue Shield of New Jersey and AmeriHealth -- on the state's insurance exchange for 2017.
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