Land Of Lincoln Health Stops Writing New Small-Group Policies

Nov. 30--Land of Lincoln Health, a federally funded insurance startup, is no longer accepting new small-business customers for 2016, the company confirmed Monday.

A spokeswoman at the Chicago-based insurer said current small-business clients will be able to renew into a 2016 Land of Lincoln policy. But renewals will have to be done directly with the carrier or through an agent or broker, outside the Illinois health insurance exchange on HealthCare.gov.

Land of Lincoln said its goal is to end 2016 with about 10,000 small-group members. As of the end of October, the company had about 8,000 members who work for about 1,000 small employers in the state. The businesses generally have 50 or fewer full-time employees.

Land of Lincoln has stopped writing new small-group policies as part of a broader plan to limit growth and preserve capital next year. The company plans to freeze 2016 total enrollment, including individuals who buy plans on or off the exchange, at 65,000 to 70,000 members. It currently has about 54,000 enrollees.

Land of Lincoln is one of 23 nonprofit health insurers funded under the Affordable Care Act, President Barack Obama's signature health care law. Land of Lincoln received $160 million in low-interest loans to launch.

The companies, known as Consumer Operated and Oriented Plans (co-ops), were created to inject more competition into the health insurance industry and lower prices. They sell policies almost exclusively to individuals and small groups on exchanges.

But the exchange population has turned out to be more expensive to insure than anticipated and several of the co-ops are struggling financially. All were counting on receiving hundreds of millions of dollars from the federal government under risk-mitigation programs in the Affordable Care Act to survive the first few years.

But co-ops say only a fraction of the money will arrive thanks to partisan politics and government mismanagement. Land of Lincoln requested about $4.5 million for the 2014 policy year. It is going to get $566,023, or 12.6 percent.

The shortfall forced the company to scale down its ambitions for 2016 after adding 50,000 members this year. Land of Lincoln has also raised premiums by an average of 25 percent across individual and small-group policies.

But for several co-ops, the shortfall turned a difficult situation into a crisis. Twelve of the 23 co-ops have shut down or plan to in the near future.

asachdev@tribpub.com

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