NJ Obamacare insurer Health Republic liquidated

Feb. 03--Health Republic Insurance of New Jersey, a nonprofit insurer that sold policies on the Obamacare exchange in the Garden State, will be liquidated, state regulators said Friday.

The decision clears the way for health care providers to be reimbursed for services they provided -- by a fund that helps insurance companies that have become insolvent, officials said.

Health Republic, a co-operative owned by its members instead of private shareholders, had about 35,000 individual and small business members.

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It doesn't appear to affect overall enrollment. Some 295,000 New Jerseyans signed up for coverage through the exchange for 2017, according to figures released Friday by the Centers for Medicare & Medicaid Services. That's up from about 270,000 the same time last year.

Health Republic's liquidation highlights the tough road some insurance companies faced as they tried to compete in the Obamacare marketplace. For 2017, just two insurance companies -- AmeriHealth New Jersey and Horizon Blue Cross Blue Shield of New Jersey -- sold plans in the individual exchange, down from five in 2016.

Co-ops fared particularly poorly. Many weren't big enough to negotiate low rates with providers; they didn't have other lines of business that could have supported their losses; they didn't have an easy way to raise capital; and some faced big payments into the Affordable Care Act's risk-adjustment program, which requires insurers with healthy customers to subsidize insurers with riskier customers, an expert said.

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"I'm afraid that financial success appears to be the exception to the rule for the co-ops," said Katherine Hempstead, who specializes in health insurance coverage for the Robert Wood Johnson Foundation, a Plainsboro-based research group and charitable organization. "Out of the 23 that were created, only a small number are left. A more difficult task would be to explain how they can succeed."

Health Republic failed in part because it owed the risk-adjustment program $46.3 million. It was placed by the state into rehabilitation last September and didn't sell policies for 2017. And its members selected different carriers for this year, regulators said.

Superior Court Judge Paul Innes approved the liquidation plan Friday. The New Jersey Life and Health Guaranty Association, which steps in when insurers are insolvent, will reimburse health care providers for services they did for Health Republic members, officials said.

Michael L.Diamond; 732-643-4038; mdiamond@gannettnj.com

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