Fitch Ratings has lowered the credit rating of Health Insurance Plan of Greater New York, the primary arm of EmblemHealth, as the company continues to bleed money.
The downgrade to a BB+ rating comes about two months before Karen Ignagni takes over as EmblemHealth's top executive. Ignagni served as the CEO of America's Health Insurance Plans, the industry's lobbying group, for 22 years.
EmblemHealth provides health coverage to 3.2 million people through its two subsidiaries, Health Insurance Plan of Greater New York and Group Health. The combined entity lost $494 million in 2014 on roughly $7 billion of revenue.
Fitch analysts said EmblemHealth has lost another $40 million in the first three months of 2015, which has put the New York City-based company in a financial position that falls “materially outside Fitch's ratings expectations.”
More than half of EmblemHealth's medical membership and business stems from a benefits contract with New York City employees. But the company also became a large player on New York's state-run insurance exchange last year. EmblemHealth and many other insurers have lost money on exchange products thus far, but executives and financial analysts say it will take at least a few years before the plans become profitable.
EmblemHealth has also recorded losses on its employer and Medicare plans. The high costs of hepatitis C drugs were cited as a major cost driver.