Insurance regulators said Friday the financial condition of Health Republic of New York, the largest of 23 health insurance co-ops established by a $2.4 billion Obamacare program, is “substantially worse than the company previously reported in its filings.”
It is unclear if the co-op deliberately misled state regulators in its original filings, or if regulators found evidence of financial wrongdoing while they tried to close down the defunct non-profit. The co-op’s insolvency was announced September 25.
The New York Department of Financial Services, which regulates insurers in the Empire State, also revised its earlier announcement to the co-op’s 215,000 policyholders that they had until Dec. 30 to find new insurance coverage. Regulators now advise the co-op’s enrollees, many who are poor, that they have to secure new coverage within the next two weeks.
DFS said in a statement late Friday that consumers “must take action to choose a new plan for the remainder of 2015 on or before November 15, 2015.”
The statement said “a subsequent NYDFS and CMS-led review of Health Republic’s finances has found that the company’s financial condition is substantially worse than the company previously reported in its filings to NYDFS.”
The statement provided no further details on the new discoveries regarding the co-op, which received the largest single federal loan under the Obamacare health reform law. In addition to its original $265 million, the co-op received another $90 million in an emergency solvency loan funds from federal officials in September 2014.
The co-op previously reported it was burning through money at a disastrous rate. Its 2014 losses were $93.6 million, according to the National Association of Insurance Commissioners. In the first six months of this year, Health Republic lost another $53 million, bringing its net operating losses to nearly $150 million.
Health Republic was controversial from the very start. Its founder, Sara Horowitz, is a well-connected liberal political activist who once worked with then state-Senator Barack Obama. She was the only party approved by the federal government to open and operate three of the co-ops — in New York, New Jersey and Oregon.