Illinois Moves to Shut Down Failing Health Insurance Co-Op Set Up Under Affordable Care Act

Land of Lincoln is a nonprofit co-op, one of 23 established under the Affordable Care Act

An Illinois health insurance co-op with 49,000 policyholders in the state has become the latest casualty among a dwindling group of nonprofit alternative insurers set up under the Affordable Care Act.

Illinois regulators took steps Tuesday to shut down Land of Lincoln Health, a 3-year-old startup that lost $90 million in 2015 and more than $17 million through May 31.

Illinois Department of Insurance officials announced they are seeking a court order allowing the state to take over Land of Lincoln Health and prepare the company for liquidation.

The department's acting director, Anne Melissa Dowling, will work with the federal government to establish a 60-day special enrollment period for Land of Lincoln policyholders to find and purchase new health coverage.

During the transition, policyholders must continue to pay their premiums to maintain their coverage and health care providers must continue to honor their contracts for service to patients, according to a department news release.

Land of Lincoln is a nonprofit co-op, one of 23 established under the Affordable Care Act. Nationwide, more than a dozen of the original co-ops have closed.

Last month, Dowling tried an unusual maneuver to help the company by blocking it from paying a $31.8 million bill to the federal government. Dowling wrote in a June 30 letter to the federal government that she has ordered Land of Lincoln Health not to pay until it gets what it's owed by the feds — nearly $73 million — under a separate provision of President Barack Obama's Affordable Care Act.

That didn't work, according to the Illinois department's news release, which said the federal Centers for Medicare and Medicaid Services would not suspend the company's risk adjustment program liability.

"It's an unfortunate day for Land of Lincoln members and for competition in the Illinois insurance market," said Land of Lincoln spokesman Dennis O'Sullivan. "It's unfortunate that CMS chose not to work with the state of Illinois as it went above and beyond with a plan to help consumers."

Land of Lincoln was formed under the Affordable Care Act's nonprofit health insurance co-op provision and funded by low-interest federal loans. The co-ops were intended to increase competition among insurance companies and lower prices for consumers.

Copyright AP - Associated Press
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