Oct. 04--Evergreen Health, once considered among the most successful of the health insurance co-ops formed under the federal Affordable Care Act, will be acquired by a consortium of private investors and converted to a for-profit insurance company, its CEO, Dr. Peter Beilenson, said Monday.
The deal would allow the Baltimore nonprofit to remain in business but is another blow to a key provision of the federal health reform law, which established such consumer-oriented and -operated health plans, or co-ops, as a way to improve competition in the insurance marketplace and help stem rising prices.
Only six of the 23 co-ops launched nationwide remain, including Evergreen, which insures 38,000 people in Maryland. The rest closed or are in the process of winding down, unable to attract enough members, draw enough premium revenue and withstand the weight of new and costly regulatory hurdles created under the health reform law.
"It really was envisioned that the plans would be nonprofits that would plow any profits back into the benefits, so that ultimately the beneficiary of their success would be the consumer," said Sabrina Corlette, a senior research professor at the Center on Health Insurance Reforms at Georgetown University's Health Policy Institute. "By converting to a for-profit, while it may be essential to Evergreen's survival, now the reapers of any success will be investors, not the members -- that's unfortunate."
Any acquistion must be approved the Maryland Insurance Administration and the federal Centers for Medicare and Medicaid Services, which loaned Evergreen $65 million of seed money and initially prohibited such conversions by the co-ops.
Evergreen declined to disclose the identities of the investors or the financial terms. If approved, the deal could close in the first quarter of next year.
One of the few co-ops to report a profit, Evergreen was crippled by new insurance rules that required it to make a "risk-adjustment payment" that amounted to $24 million for 2015 -- more than a quarter of its $85 million in revenue. Beilenson blamed the payment program for Evergreen's inability to remain an independent nonprofit
"It's not that we're a failure -- we did what we could to survive," Beilenson said. "It's that this risk adjustment basically forced our hand."
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