TRENTON -- Faced with "a deteriorating financial condition," another health insurance carrier is pulling out of New Jersey's health exchange marketplace created under the Affordable Care Act, forcing 35,000 policy holders to find a new plan in 2017, the state's top insurance official announced Monday night.
Health Republic Insurance of New Jersey will serve customers through the end of the year, state Department of Banking and Insurance Commissioner Richard Badolato said.
The state is working out a "rehabilitation" plan that preserves the carrier's financial assets so medical providers will be reimbursed for the care they provide consumers for the remainder of the year, Badolato said in a statement late Monday.
"We will also be assisting individual consumers as they transition to a new plan during the open enrollment period this fall," Badolato said. "Similarly, we will work with small employers as they seek replacement plans for their businesses."
The announcement comes weeks after Oscar, another start-up health insurance company, decided to pull out of New Jersey. It serves about 24,500 policy holders, according to the most recent state figures.
Oxford Health Plans, owned by UnitedHealthcare Co., announced in May it was pulling out of New Jersey's health exchange.
The announcement also follows a national pattern of Obamacare co-op failures. Just seven of the 23 co-ops remain, according to a Forbes report in July.
Health Republic got its start with $107 million loan through the landmark health care law, in an effort to create competition. But more than half of the nonprofit co-ops (or consumer-operated and oriented programs) have folded, crippled by higher than anticipated expenses and the financial requirements of the federal law.
Health Republic owes $46.3 million under the risk adjustment program tied to the Affordable Care Act, which requires insurers which enroll healthier and less costly enrollees to contribute to a fund that would bail out plans serving a larger share of sicker and most expensive patients.
In the spring, the federal government estimated Health Republic would owe just $17 million to the risk adjustment program.
"Despite our hard work and growing customer base, the unfortunate necessity for complying with the ACA's risk adjustment mandate has put the company under considerable financial strain," said Health Republic of New Jersey Interim CEO Tom Dwyer said in a joint statement with Badolato's office. "Leadership...remains committed to its members and medical providers and will work closely with DOBI under the order of rehabilitation."
Insurance company ditches N.J. Obamacare market
The rehabilitation plan is not a bankruptcy, although it needs court approval, state banking and insurance spokesman Marshall McKnight said.
"Rehabilitation will allow the Department to stabilize the company while measures to strengthen its financial condition can be pursued, in anticipation of a potential return to the marketplace in 2018," McKnight said.
Open enrollment for the fourth year of the Affordable Care Act begins Nov. 1. The insurance carriers that remain are the two most dominant, Horizon Blue Cross Blue Shield of New Jersey and AmeriHealth, which together insure more than 80 percent of individual enrollees.
The latest departure signals a need repeal Obamacare, according to Erica Jedynak, state director for the conservative group Americans for Prosperity.
"The collapse of the Health Republic Insurance of New Jersey is the latest example of how Obamacare is unaffordable, unworkable and hurting the American people," Jedynak said. "The co-op's demise will now upend the lives of 35,000 New Jerseyans, forcing them to scramble for new health insurance by the end of the year. Meanwhile, tens of millions of taxpayer dollars will have been wasted."
Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on Twitter @SusanKLivio. Find NJ.com Politics on Facebook.