Illinois Obamacare plan crippled by losses

The operating losses continue to mount at struggling Land of Lincoln Health, totaling $90.8 million for the Obamacare health plan in 2015.

That net loss is almost five times greater than the Chicago-based startup reported in 2014, when it totaled $17.7 million. The insurer lost about $40 million in just the last three months of 2015, according to a new financial statement filed with national insurance regulators.

Jason Montrie, Land of Lincoln president and interim CEO, did not immediately respond to a message seeking comment.

Kevin Scanlan, chairman of the insurer's board of directors, said in a statement: "Land of Lincoln Health, like other insurers across the market, continues to adjust its business model as we learn how to best adapt to the new marketplace. . . .The board is confident in its long-term viability and will continue to evaluate and invest in the needs of our members.”

Touted by small businesses as an alternative to big insurers, Land of Lincoln was one of 23 co-ops nationwide spawned by the Affordable Care Act to create competition on the health insurance exchanges and force down prices. It was the only one in Illinois.

But just three years in, 12 of the 23 co-ops had closed as of Jan. 30, according to Sabrina Corlette, senior research fellow at the Center on Health Insurance Reforms at Georgetown University. They were beset by sick and expensive enrollees, legacy insurers with deeper pockets and federal funding that disappeared.

Land of Lincoln had a rocky start. After a lackluster performance during the first year of the exchange, enrollment boomed, reaching almost 70,000 members as of January. The insurer generated $147.4 million in total revenue in 2015, more than 10 times greater than in 2014, when it took in $14 million with fewer enrollees.

But in October, the insurer announced it was capping enrollment in a bid to cut costs as its operating loss ballooned. The co-op drew the ire of customers in January when announcing it would drop University of Chicago Medicine from its network on March 1. The Hyde Park-based system is an academic medical center that treats the sickest patients, including those who need transplants or to manage costly chronic conditions. These types of facilities tend to be more expensive than typical community hospitals.

A pair of U of C Medicine patients with a Land of Lincoln health plan sued the insurer, alleging fraud.

A spokeswoman for the Illinois Department of Insurance did not immediately comment on Land of Lincoln's latest financial troubles, but the agency has been keeping a close eye on the co-op.

The state agency has at least two options should Land of Lincoln get into deeper financial trouble. If the co-op decides to stop selling policies altogether, it could pay outstanding claims under the department's supervision. That process could take more than a year.

More aggressively, the department could petition the courts to become Land of Lincoln's receiver. In that case, the Illinois Life & Health Insurance Guaranty Association, a nonprofit that assesses fees to member insurance companies, would pay the co-op's outstanding claims to patients and their doctors if Land of Lincoln ran out of money.

"Illinois Obamacare plan crippled by lossesIllinois Obamacare plan crippled by losses" originally appeared on the website of Crain's Chicago Business.