PORTLAND, Maine — Maine Community Health Options, the state’s largest individual health insurer, expects to raise rates for its 2017 plans after closing 2015 in the red.
The financial troubles have put the insurer under closer watch from state regulators, who said they tried to stop enrollment in the fall to stem projected premium losses estimated at $43 million for 2016.
The company posted a total $74 million shortfall last year, which includes the $43 million it will set aside to cover projected losses in the year ahead. In 2014, it was the only co-op in the country to turn a profit from its plans offered under the new Affordable Care Act.
Michael Gendreau, a spokesman for the insurer, said the insurer is not going to close and that state regulators’ scrutiny after 2015’s financial hit “does not affect our member’s coverage whatsoever.”
When it came on the market, MCHO shot to the top of Maine’s individual health insurance market and was expected to grow to 40,000 members by 2019. It ended February with 84,269 members, according to state regulators. Most members are in Maine, though the exchange also operates in New Hampshire.
With that growth in members, its total hospital and medical payments ballooned 138 percent as total revenue from premiums grew by about 71 percent. The company’s bottom line has many other factors, but revenue fell below total medical payments last year, a change from 2014, according to the company’s 2015 financial statement.
The financial shortfall last year caused the insurer to return to the drawing board for its 2017 rates, which it will propose by a deadline in April. Gendreau said the company plans to raise rates but hasn’t determined by how much.
In the meantime, he said the company will trim administrative costs. Those costs had risen by two-thirds last year to about $48 million from about $29 million in 2014.
“We’re trying to minimize expenses as best we can and continue to offer a quality product and quality service,” Gendreau said.
The state’s Bureau of Insurance said with notification of the losses last fall, it “increased its level of regulatory supervision to the highest level possible short of a judicial proceeding” and asked the insurer to stop writing new policies.
Doug Dunbar, a spokesman for the insurance bureau, wrote in an email that the state has received more inquiries from the public about MCHO, but “has not experienced an increase in concerns about quality of care or payment of services.”
MCHO curtailed its enrollment early, both directly and through the online health insurance marketplace the federal government runs for Maine and other states.
Under the higher level of monitoring, MCHO also drafted a detailed financial plan for each month of 2016. In January, the insurer outperformed the plan, state regulators said.
Nationally, losses by insurance co-ops have raised concern about their ability to continue to offer plans under the Affordable Care Act.
Insurance Journal reported in December that a dozen of the 23 co-ops created under the Affordable Care Act have folded. Those types of insurers were created and have received federal funds in order to compete on the exchanges with private and other insurers.
In Maine, those other insurers include Aetna, Anthem and the nonprofit Harvard Pilgrim Health Care.
Gendreau said he doesn’t think the latest year portends doom for Maine Community Health Options and could reflect the challenges of an insurance risk pool that’s more likely to include people who have not had insurance in years before.
“It’s like looking into a crystal ball, but we saw that initial peak of claims costs,” Gendreau said. “I do think a portion of it is that people who did not have health insurance and who were putting off getting the care that they needed for many reasons.”