Health Republic posts losses of $500M in 2015
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Health Republic Insurance of New York lost $500 million from operations in 2015, according to an audit recently posted online as part of the defunct insurer's liquidation.
It shut down Nov. 30, 2015, after state and federal regulators ordered the insurer to begin winding down because it was headed toward insolvency. A Crain's investigation last year found that the insurer failed because of a flawed strategy for attracting customers with low premiums.
Massive congressional cuts to the risk-corridor program, aimed at backstopping the nascent Affordable Care Act marketplaces, also contributed to its demise.
Health Republic's balance sheet showed liabilities exceeded assets by $364 million as of Dec. 31, 2015—a grim reality for policyholders and providers seeking payment. The insurer had $209 million in unpaid claims to providers and had received $1.7 million in premiums from customers whose coverage was worthless.
Health Republic had about $119 million in assets at the end of 2015. Expense reports show the company has spent nearly $6.9 million in legal, consulting and administrative services since its liquidation began last May.
The company received about $538 million in premiums in 2015 but spent $1 billion on operations. In New York state, insurers are required to spend at least 82% of premiums on medical expenses. Health Republic spent 164% of the premiums it received on care.
Correction: Health Republic's balance sheet showed liabilities exceeded assets by $364 million as of Dec. 31, 2015 That fact was misstated in an earlier version of this article."Health Republic posts losses of $500M in 2015" originally appeared in Crain's New York Business.
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