On Tuesday, Illinois took first steps to push a struggling Obamacare health insurer, Land of Lincoln Health, into an orderly shutdown of the business. The company announced that about 49,000 policyholders would see themselves without health coverage in the next months.
State lawmakers, however, pledged to enable the affected people to purchase a health plan from a different health insurers before the year’s end. Yet, if Land of Lincoln customers wish to keep their health coverage in the meantime they’ll still have to pay the premiums.
The interim chief executive of Land of Lincoln Jason Montrie decried the current situation of the company’s customers saying that it was a bad day for them and the Illinois health insurance marketplace.
“This is the end,”
Authorities argued that the startup company had to be closed due to its failing financial condition. The firm now owes nearly $32 million to other insurance companies under the Affordable Care Act, also known as Obamacare.
The company became indebted because of a complex formula in President Obama’s health care reform which strives to find an equilibrium in risks among insurers to prevent premiums from rising. However, this formula was the final nail in the coffin for Land of Lincoln, which had already lost over $90 million in 2017.
Though the Department of Insurance tried to save the company by putting the payment on hold until the firm got federal funds under Obamacare, the federal Centers for Medicare and Medicaid Services said no to the rescue plan.
Montrie recently said in an interview that he and his employees felt bad and frustrated that so many customers were left in limbo. He added that the firm was disappointed in the CMS’s move.
The U.S. Department of Health and Human Services couldn’t be reached for comment.
Land of Lincoln and 22 more nonprofit insurers known as co-ops started their businesses in 2014 when they received $2.4 billion in federal loans under an Obamacare provision. The federal co-op plan’s initial goal was to give people an alternative to big insurers that could cut costs of health coverage.
The 23 co-ops provide affordable health coverage to over 1 million Americans, but many of them currently struggle. Apparently, they developed the business too fast and failed to cover unexpected health costs such as those for people that were sicker than expected or hadn’t had a health insurance in years.
Additionally, they received another hard blow when an extra influx of federal money they counted on to save their business failed to come through. In the meantime, Land of Lincoln sued Obama administration to recover more than $70 million.
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