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CareConnect Continues to Focus on Affordability as Circumstances Force Rate Request Hikes

If Not for Risk Adjustment Policy, Rates for Small Businesses Would Remain Flat for 2018; Rate Increase for Individual Plan is Part of Continuing Correction

Lisa Davis, CareConnect Insurance Company, Inc., 516-405-7549, ldavis9@nslijcc.com

June 1, 2017 - 3:00 pm

East Hills, New York, May 31, 2017 —CareConnect’s significant rate hike requests for small-group plans in 2018 are driven in large part by the federal small-group risk adjustment program, a flawed policy that was designed to protect the stability of the health insurance market and encourage competition but is having the opposite effect. CareConnect’s request for rate increases for its individual plans reflect the fact that this market has a greater need for medical care than originally anticipated. 

CareConnect’s requested 2018 rate increases average 19 percent for small-group plans and 30 percent for individual plans. If not for the risk adjustment program, which is costing CareConnect $124 million this year for its 2016 small-group payment, the company would not have requested a rate increase for its small-group plans. The requested rate increase for individual plans is part of a continuing correction and is an unavoidable response to this population’s unexpectedly large and continuing need for medical care. 

New York State’s first provider-owned commercial health plan, CareConnect offers a streamlined experience for people trying to navigate the complicated world of healthcare. It covers more than 125,000 members in downstate New York, offering access to a network of over 20,000 top providers throughout the metropolitan area. 

The company has worked diligently with federal and state regulators to find a solution to the problems caused by the small-group risk adjustment program’s flawed methodology. This program, part of the Affordable Care Act, was designed to prevent insurers from “cherry-picking” healthy customers who are less expensive to cover. It attempts to accomplish this by requiring carriers with particularly healthy customers to transfer money to carriers whose membership is relatively unhealthy. However, flaws in the small-group program have resulted in New York’s smaller, more-innovative insurers essentially having to subsidize their largest competitor, UnitedHealthcare. The $124 million that CareConnect has to pay into the risk adjustment program this year for its small group plans represents almost half of the premium payments the company received for those plans. 

CareConnect is gratified that DFS agreed that the program is not working as intended and has issued regulations that will help reduce future risk adjustment payments. Nevertheless, insurers are required to include the costs of the program in the calculations that produce their rates. “The reality of the small-group risk adjustment program is that it unnecessarily raises the cost of health insurance for New York consumers by hundreds of dollars each month,” said Alan J. Murray, president and CEO of CareConnect. “We’ve shown that CareConnect’s member-focused, provider-driven approach works, aligning incentives for effective, efficient care. We will continue to work to level the playing field so we can do what we were created to do: make sure New Yorkers can get top-quality health care at prices that are both fair and affordable.” 

About CareConnect Insurance Company, Inc. 

The first provider-owned commercial health plan in New York State, CareConnect was created by Northwell Health to make it easy for people to get and stay healthy. Its innovative model is designed to provide access to care that’s both excellent and affordable. CareConnect was founded in 2013 and offers a variety of plans for individuals, families and businesses. It is headquartered in East Hills, New York. For more information, visit www.careconnect.com.