Customers, brokers and hospitals were scrambling to figure out what to do following Friday's surprise announcement that the state Department of Financial Services was shutting down the insurer Health Republic on Nov. 30, not Dec. 31 as previously announced.
Individuals who had a Health Republic plan on the NY State of Health marketplace have until Nov. 15 to choose a new plan for the remainder of 2015, the state said. Employers with small group plans through Health Republic "should act as soon as possible to choose a new policy from another insurer," the agency said.
Vincent Capone, 60, of Smithtown, a retired dentist with pancreatic cancer, said he was shocked when he first learned that Health Republic was closing -- and then learned Friday it was closing even sooner.
His hospital, Memorial Sloan-Kettering Cancer Center in Manhattan, doesn't take any other plans from the exchange, and he is anticipating whatever he buys for December and for next year will cost much more. "The whole point of the Affordable Care Act was to make it affordable. If this plan was set up but was priced too low and then went out of business, then I guess the whole thing was a sham," he said.
The state announced on Sept. 25 that the federally backed health insurer was being closed Dec. 31 because of financial problems. But the state and federal government said in a release Friday that a "review of Health Republic's finances has found that the company's financial condition is substantially worse than the company previously reported" and had to close sooner.
The Nov. 30 shutdown raised new issues, including whether other insurance companies will honor deductibles Health Republic customers have already paid for this year, as the state is urging.
"We are still in the discussion process," said Leslie Moran, spokeswoman for the New York Health Plan Association, a trade group. "Operationally how do you even do it? What are the mechanics? There are administrative costs in trying to manage a one-month plan."
State-designated "navigators," who help people enroll in a health plan, and private brokers said they spent Saturday calling clients.
Stacy Villagran, head of the navigator program for the Nassau-Suffolk Hospital Council, said they had contacted about 150 families signed up with the insurer. And, she said, "the phones have been going all day."
Hospitals are worried they won't be paid. On Friday, a DFS spokesman said the department is "working to make sure claims are paid to the maximum extent possible." But the Nassau-Suffolk Hospital Council, which represents 23 Island hospitals, and the Greater New York Hospital Association, which represents 160, have both sent surveys to ask members how much they are owed.
"Our members and health care providers entered into a contract in good faith," said Wendy Darwell, Nassau-Suffolk Hospital Council's chief operating officer. "Our members are deeply concerned about the ability of Health Republic to pay."
Health Republic was one of 23 Consumer Operated and Oriented Plans, or CO-OPs, created under the ACA to increase competition and offer low-cost health care. So far 10 have gone out of business. Health Republic was popular, with the second-highest percentage of individual and family enrollees on the exchange -- 19 percent -- and the highest percentage of the state's Small Business Health Options exchange -- 35 percent. More than 16,000 Long Islanders bought the insurance from the exchange.
So far it has reported $130.5 million in losses. It also owes the federal government $265 million in loans.
Health Republic said it had "been working closely and transparently with our state and federal regulators since our inception" and blamed the "insurmountable financial gap created largely by the risk corridor program only paying out 12.6 percent of the $149 million Health Republic was owed for 2014."
The federal risk corridor program was intended to mitigate financial risk of health plans operating on exchanges by taking funds from insurers with more successful businesses and distributing them to less successful insurers. However, more sought payments than paid them, so the government is paying only 12.6 percent of what it owes.
But many are wondering why Health Republic's collapse wasn't anticipated or better handled.
"I don't know if there's a precedent for this," said Jack Glanzer, president of The Granite Insurance Brokerage in Lynbrook. "This is terrible. It really is."
The state has set up a Health Republic hotline: 855-329-8899.