Fourth health insurance company to leave Colorado

Friday Health Plans will become the fourth health insurance company to withdraw from the Colorado market in the past year, according to a Thursday announcement from the Colorado Division of Insurance.

Friday’s departure is added to Humana, which involved around 155,000 subscribers; Bright Health, which covered approximately 30,000 members; and, Oscar Health, which covered 3,800 members. All three companies announced in 2022 that they, too, would be leaving the Colorado market.

Three of the plans operated in the small group and individual markets. Humana operated only in the small business market.

Friday has enrolled approximately 30,000 Coloradans in its HMO plans, mostly in the individual market.

The company, which had 230,000 members in Texas, was placed into receivership in that state in March and its assets were placed into liquidation.

Approximately 203,000 Coloradans are enrolled in health plans in the individual market. Another 220,000 are enrolled in the small group market, which is for companies with up to 100 employees.

The insurance division said Thursday that Friday Health’s problems are financial and national.

Friday’s problems are national, the company’s aggressive growth in other states around the country has advanced funding,” the division’s announcement reads. “While Friday Health Plan of Colorado retained the capital required by Colorado law, i problems in other states and with the parent company is now affecting the company here.”

The division stopped signing up for Friday plans last month.

Critics of Option Colorado, the state-designed health insurance plan, said mandates placed on health insurers are forcing some out of the Colorado market. This is disputed by Insurance Commissioner Michael Conway, who said plans to leave Colorado did so based on national issues and not because of the Colorado option.

But the departure of so many plans over the past year has prompted lawmakers to make changes to the state’s insurance guarantee association, known as the Colorado Life and Health Protection Association, a statutory non-profit entity. Under House Bill 1303, the association would add protections for HMO-enrolled providers and consumers, like Friday, up to a statutory limit of $500,000 for each insured entity.

HB 1303 was sponsored by Rep. Kyle Brown, a Louisville Democrat who helped design the Colorado option while he was deputy commissioner of the Division of Insurance, and spokeswoman Julie McCluskie, D-Dillon, whose district includes the Peak Health Alliance .

Bright Health had been Peak’s sole carrier, and its decision to pull out of Colorado meant Peak had no health plans in 2023. Peak began offering Bright plans in 2020 in Summit County and has expanded to seven other counties in Western Slope.

Bright was fined $1 million in April 2022 for operating issues by the Division of Insurance, including 100 consumer and healthcare provider complaints in 2021 and 2022. The company announced in October it would exit business in nine states, including the Colorado.

Complaints included failure to pay provider claims under Colorado law, failure to communicate with members, inability to accurately process consumer payments and bills, and premature processing of physical and behavioral health coverage claims.

In 2024, Elevate, the health plan offered by Denver Health, will begin offering insurance for Peak consumers.

Friday’s failure was alluded to in testimony on HB 1303 in April. Greg McCarthy, the chief executive officer of the Denver Health Medical Plan, told the House Public and Behavioral Health & Human Services Committee that two carriers are at risk of going bankrupt and becoming insolvent. He did not identify them, but said DHMP has a credit on its books of $20 million in risk adjustment transfers owed by the two carriers it cites as being at financial risk.

Adam Fox of the Colorado Consumer Health Initiative also pointed to potential risks to “one or two” health insurance companies and their situations in other states that could jeopardize access to health care in Colorado, emphasizing the need for the legislation . Governor Jared Polis signed HB 1303 on May 15.

An insurer’s “profit-seeking or financial mismanagement should not jeopardize other insurers or create further instability in the market,” Fox told the committee.

Fox said that there is always a certain level of instability in the insurance markets which is why the guarantee association was set up. Some insurers aggressively enter a market and undervalue their products, which puts them at risk, she explained.

Representative Richard Holtorf, R-Akron, called the market instability “a storm on the horizon.”

Conway identified Bright and Friday as the companies at risk, although Bright had already announced six months earlier that it would be leaving the state.

Bankruptcies could have short-term impacts on insurance rates, Conway said. He indicated that rural healthcare could have taken a much bigger hit without the backstop provided in HB 1303.

If doctors or hospitals are shouldering the burden of not getting paid, they will increase what they charge insurance companies and that will impact rates, Conway added.

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