Assurant Health absorbed a $124 million net loss in the second quarter this year as the financially troubled health insurer continues to wind down its operations.
The Milwaukee-based company, which will shut down by the end of 2016, also had to settle a complaint in Montana that it illegally charged sicker enrollees more than healthier ones.
The $124 million loss in the second quarter means Assurant Health, which has about 1 million members, lost about $272 million in the past 18 months. A significant portion of the second-quarter deficit, about $107 million, was tied to a lack of premium revenue to cover medical costs and other “exit-related charges,” Assurant said.
The parent company, Assurant, a home and life insurance company, put its health insurance unit on the block in April. After six weeks of trying to find a buyer, Assurant decided to shut down the health insurer altogether, saying the move would cost about $250 million.
Assurant Health had invested heavily on the Affordable Care Act's exchanges this year, selling health plans in 16 states. But its members wound up being much sicker than expected, which drove up medical claims costs. Assurant blamed the adverse risk selection on the federal government's decision to allow people to keep their health plans that were not compliant with ACA standards through 2016.
Some state insurance regulators will not miss Assurant Health. The company had been fined multiple times the past several years for not paying or unreasonably denying claims.
This month, it had to pay Montana a $25,000 fine and refund $1.7 million to Montana consumers who bought an Assurant Health policy. The state found Assurant Health offered discounts to people who had few claims, which essentially meant sicker people were paying more. The ACA prohibits insurers from charging enrollees more based on health status.
“Charging higher prices to sick people for the same health insurance policy is discrimination,” Montana Insurance Commissioner Monica Lindeen said in a news release. “That's not how health insurance works in Montana.”