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NY rule eases Obamacare burden on insurers including Northwell’s

Workers stand inside the branding bus for the

Workers stand inside the branding bus for the name change from North Shore LIJ to Northwell Health at Huntington Hospital Dec. 5, 2015. Credit: David L. Pokress

New York State on Friday announced an emergency regulation easing a financial burden placed on some insurance companies by Obamacare.

The move prompted New Hyde Park-based Northwell Health to back away from a warning that it could withdraw its CareConnect insurer from the insurance market.

The New York State Department of Financial Services said in a release Friday that it issued the rule to rectify an “imbalance” in financial transfers among health insurers.

A provision of the federal Affordable Care Act — widely known as Obamacare — will require CareConnect to transfer $53.2 million to other insurers, according to Northwell’s financial statement for the first half of 2016. The anticipated transfer resulted in a net loss of $46 million in the period for CareConnect.

A Northwell Health spokesman said in a telephone interview that the company was “very pleased,” at the new regulation, adding, “If there was no action at the state or federal level we were concerned about the long-term sustainability of our insurance enterprise.”

The transfers, which are calculated by the Centers for Medicare & Medicaid Services, are designed to move money from insurers with healthier populations to insurers with less-healthy populations. The purpose is to allow insurers covering populations with more health issues to compete effectively, the state agency said.

The Northwell spokesman said that when CareConnect signs up small-group plans it has no insight into whether enrollees are healthy or sickly.

The state said Friday it will determine whether the transfers will have “an adverse impact” on the marketplace for small-group plans. Small groups are defined as having one to 100 enrollees, including sole proprietors. Under the new rule, some of the money can be returned to the insurers that paid it out.

About 30 percent of East Hills-based CareConnect enrollees are in individual plans, about 65 percent in small groups and about 5 percent in large groups.

“Unfortunately, with the complex methodology, the goal of leveling the playing field was not achieved and smaller companies like CareConnect were hit particularly hard,” the Northwell spokesman said.

CareConnect has grown rapidly, with membership increasing about fourfold over 12 months to 97,175 as of June 30.

Other insurance companies expected to benefit from the new state regulations include HIP, Aetna Health Inc. and Excellus health plan, which had to pay into the risk-adjustment program, a state official said.

For the half-year ended June 30, Northwell Health posted net income of $129.7 million on operating revenue of $4.8 billion. That compares with net income of $94.8 million on operating revenue of $4.2 billion in the year-earlier period.


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