Key provider of Obamacare health insurance must liquidate. Land of Lincoln Health, a health care insurance co-operative set up under the terms of the Affordable Care Act (Obamacare), has defaulted on its payments. The State of Illinois initiated steps on Tuesday, July 12 to wind up the operations of the failing firm and shut it down. 49,000 Illinois residents had purchased mandatory health care insurance through Land of Lincoln, which sold its policies to the individual, individual family, and self-employment markets. They will have to find emergency new coverage before the close of calendar year 2016.
From Illinois Rep. Jeanne Ives (R-42)
The failure of Land of Lincoln paralleled the failures in other states of Obamacare co-ops, which have been whipsawed by heavy claims rates and mandatory risk adjustment payments. Under the current Affordable Care Act, co-ops are required to pay expensive “risk adjustment payments” to established, private-sector health care insurers such as Blue Cross/Blue Shield. These payments are meant to compensate Blue Cross and other established insurers for the established cost base locked onto these existing insurers by the pre-existing health care conditions of these established firms’ policyholder bases. At the same time, co-ops thought they would be getting federal “risk corridor” payments to compensate them for, among other variables, the cost of the risk adjustment payments. Adequate risk-corridor payments never appeared, however, and the co-ops found that their risk adjustment payments were due in full. They faced a lethal whipsaw. One after another of these co-ops, including Land of Lincoln in Illinois, have gone or are going out of business.
Partly as a result of the ongoing failure of many firms within the ACA co-op industry, increasing numbers of Americans are facing monopoly suppliers of mandatory health care insurance. In whole states, such as Alabama, only one firm will sell insurance to individuals under terms that comply with the myriad requirements and mandates of the Affordable Care Act. In these geographic areas, U.S. citizens are required to comply with the terms and premium rates set by the single supplier.
{Week in Review: IL House GOP, Office of Leader Durkin. 15 July 2016}
