It shut down Nov. 30, 2015, after state and federal regulators ordered the insurer to begin winding down because it was headed toward insolvency. A Crain’s investigation last year found that the insurer failed because of a flawed strategy for attracting customers with low premiums that wasn’t sustainable.
Massive congressional cuts to the risk-corridor program, aimed at backstopping the nascent Affordable Care Act marketplaces, also contributed to its demise.
Health Republic’s balance sheet showed assets exceeded liabilities by $364 million as of Dec. 31, 2015—a grim reality for policyholders and providers seeking payment. The insurer had $209 million in unpaid claims to providers and had received $1.7 million in premiums in advance from customers whose coverage was worthless.
Health Republic had about $119 million in assets at the end of 2015. Expense reports show the company has spent nearly $6.9 million in legal, consulting and administrative services since its liquidation began last May.
The company received about $538 million in premiums in 2015 but spent $1 billion on operations. In New York state, insurers are required to spend at least 82% of premiums on medical expenses. Health Republic spent 164% of the premiums it received on care.
“Health Republic posts losses of $500M in 2015” originally appeared in Crain’s New York Business.