New Mexico: NMHC spinning off bulk of business to for-profit
New Mexico Health Connections, the nonprofit co-op insurance company formed under the Affordable Care Act, is selling its small group and commercial business to a for-profit company under a restructuring plan that will create a new insurance company that will be able to go after business the struggling nonprofit couldn’t.
...The Washington, D.C.-based Evolent will acquire NMHC’s 22,000 commercial members. NMHC will continue to exist with a few employees and presumably continue to sell individual policies on the New Mexico Health Insurance Exchange. NMHC has 10,000 individual members through the insurance exchange.
...Hickey told ABQ Free Press that the deal will allow the new firm to go after business that NMHC couldn’t, things like Medicare Advantage, federal employees and, eventually, Medicaid. It also gives the new firm capital reserves that NMHC didn’t have, he added.
NMHC is one of the four remaining 24 co-ops that were formed under the ACA. Twenty of those co-ops have gone out of business or been shut down by state regulators because of weak finances.
While it's obviously disappointing that the situation for NMHC had to reach this point, this is actually good news from a glass-half-full POV; it means they continue to operate, current enrollees presumably get to keep their plans, no one loses their jobs and so forth.
One of the other ACA-created Co-Ops, Evergreen Health of Maryland, attempted to do the same thing, last year, but the effort fell apart at the last minute. Hopefully things will go better for NMHC, although the individual market side is still fuzzy:
It’s not clear whether the NMHC that remains will be able to continue selling individual policies on the insurance exchange. The company’s rates increased for 2018 policies.
The two firms said they hope the deal will be completed by the end of the year. The sale must be approved by New Mexico Insurance Superintendent John Franchini.
There's a total of 5 carriers on the individual market in New Mexico, although only three of them are offering on-exchange policies next year.