After days of speculation, a Michigan insurer -- a one-of-a-kind entity in Michigan created under federal health reform -- is pulling its business from the state's online marketplace.
East Lansing-based Consumers Mutual will "enter into a run-off of its business," according to a statement from the Michigan Department of Insurance and Financial Services.
The co-op established under the 2010 Affordable Care Act is far from alone in its decision. About a dozen altogether have closed recently, according to national news reports.
The state insurance department, the regulatory entity, declined to comment beyond the short news release that offered few details. It advised consumers to seek coverage elsewhere, referring them to the insurer if they have further questions.
What happens to the insurer's small and large group customers is still being worked out with the insurer taking direction from the state insurance department, said Consumers Mutual spokesman David Eich.
"We don't know what the plan is going to be," he said.
Consumers has an estimated 28,000 customers, including about 6,000 who purchased individual market plans from the marketplace accessed through the federal www.healthcare.gov portal, according to Eich.
Coverage will continue until Dec. 31 for customers who had purchased Consumers policies through the marketplace, as long as they continue to pay the year's remaining premiums, according to a questions-and-answers sheet produced by Consumers for its customers.
As with other consumers who purchase plans on the marketplace, they must make a purchase by Dec. 15 to ensure coverage is in place Jan. 1.
The company is a co-op established with a nearly $72-million federal loan under the federal health reform law, which allowed for partially consumer-run insurance companies. It sought to establish itself as a different kind of insurer -- one whose leadership decisions would involve a majority of consumers on its board of directors and that marketed itself as a specialist in helping chronically ill patients keep their conditions in check.
It has been operated by many of Michigan's longtime professionals in health care and public health, including Janet Olszewski, who previously ran the state's public health department, and Dennis Litos, who previously ran two teaching hospitals, including Ingham Regional Medical Center in Lansing.
But there were problems from the get-go. On the first year of the online marketplace, or state exchange, insurers had priced their plans without knowing others' price points. When the marketplace opened Oct. 1, 2013, Consumers plans were some of the highest in the state. The insurer dropped rates the second year, but then boosted its request this past year.
Most damaging, said Eich, was news earlier this year that the U.S. Centers for Medicare & Medicare Services would not fully cover the losses the new insurance co-ops sustained, paying less than 13 cents on the dollar instead.
It was a "death knell" for Consumers and other co-ops, Eich said. "Everyone was scrambling."
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