Dec. 17--Land of Lincoln Health, a struggling insurance startup, said Thursday that CEO Dan Yunker will leave the company at the end of the year to devote time to his other role as a senior executive with a newly merged hospital trade group in Illinois.
President Jason Montrie will serve as interim CEO as the board of directors decides on a formal leadership structure, the company said. Yunker will remain on Chicago-based Land of Lincoln's board of directors.
The executive transition comes amid a lot of questions about the future of Land of Lincoln and other federally funded insurance companies created under the Affordable Care Act, President Obama's signature health law.
About half of the 23 carriers, known as Consumer Operated and Oriented Plans, or "co-ops," have collapsed. The nonprofit health plans were envisioned as a way to provide more competition, greater consumer choice and better coverage in states typically dominated by large commercial insurance companies.
But the quick death of some and the shaky financial health of the survivors has stranded consumers and intensified opposition to the law. As previously reported by the Tribune, Chicago-based Land of Lincoln is taking substantial measures to control costs and preserve capital next year, including freezing enrollment.
Despite the growing pains, Yunker said it was a logical point in time for him to step down. As a senior executive with the Metropolitan Chicago Healthcare Council, he was instrumental in putting together the winning bid for $160 million in federal low-interest loans that launched Land of Lincoln in 2013.
Yunker became CEO of Land of Lincoln, while also retaining his position with the health care council, a hospital trade association. To get the business off the ground, Land of Lincoln also contracted with the council for office space and management services. Those agreements will terminate at the end of the year.
Yunker started winding down his role at Land of Lincoln about a year ago when he became president of the trade group. In April, the health care council agreed to merge with the Illinois Hospital Association. The new group, which will be called the Illinois Health and Hospital Association, will begin operating in January, at which time Yunker will become its executive vice president.
"Land of Lincoln has grown up to be on its own, not relying on its sponsoring organization," Yunker said. "That was part of the original business plan."
The move to freeze enrollment is to make sure the company can maintain customer service rather than tax its infrastructure with more members, Yunker said. Its goal is to have 60,000 to 70,000 members next year, up from 54,000 members in 2015.
Land of Lincoln said it expects to hit the membership target before open enrollment on the insurance marketplace closes at the end of January. The company did not give an exact date of when it will pull its health insurance plans off the Healthcare.gov website, only saying it will be "in the coming weeks." Land of Lincoln offers plans throughout Illinois.
Existing customers will be able to renew their plans for 2016.
The company has previously said that it had to limit its growth after federal authorities announced in October that health insurers would only receive 12.6 percent of what they were owed under an Affordable Care Act program meant to ease risks in the law's new marketplaces.
The funding shortfall has hit startups particularly hard because they are losing money and don't have the deep pockets of established insurers to withstand volatility. Without the financial aid, several co-ops have had to cease operations and others, like Land of Lincoln, are left in a precarious condition.
Land of Lincoln lost $50.7 million in the first nine months of 2015, according to its most recent financial statement. The company said medical costs and usage of medical services have been higher than expected.
Established insurers also have struggled to make money on plans sold on the exchange and directly to consumers that are compliant with the health law. Blue Cross and Blue Shield of Illinois, the dominant insurer in the state, lost nearly $280 million on its Obamacare plans in 2014.
In addition to freezing enrollment, Land of Lincoln has raised its premiums from 2015 to 2016 by an average of 29.7 percent, one of the highest rate increases for insurers who sell on the exchange, according to Healthcare.gov's rate review site.
Nearly 80 percent of its existing customers bought insurance on their own. The company would like to diversify its risk next year by marketing group plans to large employers, Yunker said.
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