Maryland: Evergreen Health Co-Op going for-profit to survive.
h/t to Esther F. for the heads up:
Evergreen Health, Maryland’s version of the innovative nonprofit insurers created under the Affordable Care Act, decided Monday to become a for-profit company to avoid the possibility of a shutdown, according to its chief executive.
If the switch is approved as expected by federal and state officials, Evergreen’s unprecedented move will leave standing only five of the 23 co-ops, or Consumer Operated and Oriented Plans, which started nearly three years ago.
...Evergreen, which covers nearly 38,000 Marylanders, has been trying for the past year to forge an arrangement with federal health officials to stabilize its finances. It enlisted help from the state’s congressional delegation and in June filed suit against the federal government.
As noted below, only around 8,000 are on enrolled in individual ACA exchange policies; the rest are either off-exchange or small/large group coverage.
Under the deal approved Monday by Evergreen’s governing board, a group of private equity investors, will take it over from the federal government. Evergreen also has arranged for a temporary loan to sustain operations for the next several months until the conversion is completed, Beilenson said. The identity of the investors, as well as the loan amount, will become public next month as part of a state regulatory hearing.
It took me a moment to understand how changing your status from non-profit to for-profit would help if you're losing money to begin with, but it sounds like this has to do with allowing them to accept outside financing, which the non-profit co-ops weren't officially allowed to do. Presumably this will also allow them to do other things the ACA-created co-ops couldn't, such as a full marketing/advertising campaign and so forth. Whether it will work or not remains to be seen, of course, but it's better to cut them loose than to see them go belly up, I suppose.
...Evergreen wants the switch to be unobtrusive to customers. According to Beilenson, its name will stay the same, and members will keep their insurance cards and current coverage. Those members include about 8,000 people who bought their plans through Maryland’s state-run ACA insurance marketplace. The rest get coverage on their own or through small or large companies.
Before people start getting too bent out of shape, they still have to pay back the balance of the $65 million in federal start-up loans.