Friday Health Plan was an ACA insurer. It was funded by venture capital money. It went Boom! Friday’s reserve position placed substantial doubt about its ability to pay claims. That is BAD! It freaks state regulators out. Stressed out state regulators aren’t good for insurers who want to remain going concerns.
State regulators have been winding down operations. Most states where Friday had a presence had a mid-year wind-down. Friday enrollees would lose coverage at the end of a month. They would have an opportunity to enroll in a new plan from a different insurer. This enrollment would restart cost-sharing accumulation. So someone who had maxed out their deductibles would soon be facing new deductibles. This invites massive selection.
A few states thought they could get Friday to limp through to December 31st. The plan would be for Friday enrollees to have full year coverage and then switch on January 1 to a new insurer with new cost-sharing that would have happened anyways. Colorado was one of these states.
The Colorado Division of Insurance (DOI) has filed with the Denver District Court to Liquidate Friday Health Plans of Colorado. This means that Coloradans who currently have health insurance from Friday Health Plans will have that coverage end on August 31, 2023. If you’re a Friday Health Plans customer, you will need to take action to enroll in new
health insurance for the remainder of 2023 and to avoid becoming uninsured….8. Will my deductible and out-of-pocket maximum amounts carry over to a new
plan for the remainder of 2023?
The Division of Insurance (DOI) has requested that other insurance companies in Colorado honor the deductibles and out-of-pocket maximums that Friday Health customers have already accumulated for 2023.
● Kaiser has agreed to honor people’s deductible and out-of-pocket maximum
accumulations. Of current Friday enrollees, 85% have access to a Kaiser plan.
● Denver Health is still working through a decision about this. Once we know their
decision, the DOI will update this FAQ.
● Anthem, Cigna and Rocky Mountain Health Plans WILL NOT honor Friday customers’
deductibles and out-of-pocket maximums so far for 2023. People enrolling in these
plans will have to start over with these cost accumulators as of September 1.
I’m not involved in any of these discussions so I’m speculating right now.
I think Colorado is trying to do a smooth winddown that minimizes harm to enrollees. Kaiser is willing to take on cost-sharing and hold enrollees harmless. This likely means that they are going to get a lot of fairly sick people enrolling with them. The other insurers are likely worried about selection and are running away from the risk.
Meet Amir’s Kitty, Aoife!
Yarrow
Thanks for the info. It’s just infuriating in general that people have to start all over mid-year with deductibles, etc. That seems wrong and like it’s something that should be fixed with legislation that requires insurers to cover any mid-year changes. Especially if it’s a situation like this where it’s not the fault of the enrollees that their insurance provider failed. But in general it’s a bad thing. Take a new job in July, start all over with your deductibles. It’s just wrong.
Barbara
I am still somewhat amazed by the propensity of venture capital to see insurance as a straightforward business. The ACA individual exchange market, in particular, is not an easy business to price.
Jim Bales
David
is there anyway Colorado could claw back some of Friday’s reserve cash and use that to pay the new insurer the amount of any already-paid deductible that the new insurer chooses to honor?
Best
Jim
Barbara
@Yarrow: I can see the pros and cons of adopting such a requirement legislatively. The disadvantages relate to the pricing assumptions that have to be made under the ACA’s rating requirements, but I agree that it’s not fair that the consumer is left holding the bag.
Citizen Alan
The very existence of private health insurance now enrages me. The whole fucking point of insurance is to create a risk pool for a large group of people who pay in a comparatively small amount to protect against harms that will only impact a smaller subset of those people but randomly distributed. And since you can’t have a bigger risk pool than “EVERYONE IN THE COUNTRY!” there is no sensible reason not to have the government operate national health insurance and let all the companies shrink down into boutique insurance or gap insurance companies. But now, the Great God Mammon must be appeased, which means we all have to deal with private companies run by greedy Vulture Capitalists who would kill us in a heartbeat if they could profit from doing so.
Barbara
@Jim Bales: That seems like the right approach — I don’t know how feasible it would be. But at the very least, it seems right to give consumers as much priority as health care providers.
Ruckus
David, why did it go boom?
Bad management?
A crap product?
In over their heads? ???
Does it make much difference what the reason is?
It seems to me that a lot of the bigger business community seems to run their business like every thing is perfect, it must be, look how big they are. Is this somewhat common in the insurance business?
I think we don’t see them fail all that often but many businesses seem to flounder a lot more than one would suspect they should. I’ve owned 2 so I have at least a modicum of a concept of the effort to be successful, profitable, reasonable. Is it humanity, or hubris or being in over their heads? All of the above? I do understand that a lot of effort and knowledge is required to run a successful anything. Is it money or lack thereof? Yes sure, money is a requirement to run any business, I get that, as someone who once took less than 5 minutes to decide to spend just over 1/4 of a million dollars. (Which was the best business decision I ever made, but an earthquake got in the way.)
Yarrow
@Barbara: I understand that but it’s really bad that the insured people are left holding the bag. My cousin got hit with this situation one year when she was pregnant and her husband had a serious health issue requiring surgery and their insurance changed mid-year. This was not ACA but insurance from a job. Job change meant new insurance and starting over with their costs. All the money they’d paid in deductibles in the first half of the year didn’t count and they had to start over again during a year of big health expenses, one very unexpected.
Something needs to be done to deal with this issue. If every insurer knew they’d have to cover it then they’d figure out how to price it.
Miss Bianca
Sorry to see Friday go – figured the writing was on the wall when they suddenly were jacking their premiums up for the Connect to Health network. My insurance broker steered me away from them this year.
Scamp Dog
@Miss Bianca: Glad to hear you got good advice! I’ve used the brokers for their advice as well, and so far they’ve been steering me to Kaiser, as I expected. So far, so good, but I haven’t had any major health problems to test how things work under more stressful circumstances.
Scamp Dog
@Miss Bianca: Glad to hear you got good advice! I’ve used the brokers for their advice as well, and so far they’ve been steering me to Kaiser, as I expected. So far, so good, but I haven’t had any major health problems to test how things work under more stressful circumstances.
Sorry for the double post–I mis-entered my new email address on the first try, and want to get the correct one there.
persistentillusion
@Scamp Dog: I’ve have Kaiser coverage for more than 7 years and while I haven’t had a major utilization, I have had two ER visits. They covered them with no issue. HTH.
lowtechcyclist
The title confused me at first – I was wondering if there was a Colorado meetup planned for a Friday in August that needed to be moved to another weekday or nixed. ;-)
Then I remembered about that failing insurance company.
DaBunny42
What’s Kaiser’s motivation to hold new enrollees harmless?
jonas
@Ruckus: A lot of these VC techbros think they’re the smartest human beings who ever existed and that people doing things the “old way” are idiot chumps or something. There’s a reason wheels are still round after all these millennia and there’s a reason health insurance products are structured and priced the way they are. If there were a cheaper or more profitable way of doing it, it probably would have already been done that way. Which is why these guys are almost always left with a big plate of fail despite pissing away a billion dollars and cutting a bunch of ads with cool, iPod-wearing, skateboarding Gen-Z’ers talking about “disrupting” this or that.
I thought of this the other day when I read that some rich Instagram “influencer” is buying up a bunch of old A-380s with the intention of using the massive double-decker planes to start a revolutionary new airline flying from the US to the UK that will offer affordable tickets to regular folks but with all these super cool first-class amenities and comfortable seats like they used to have in the good old days. But because he’s so smart — way smarter than those bean-counting goobers at the legacy airlines who couldn’t make it work — it will totally work financially and everything this time! He swears!
And so it goes.
Scamp Dog
@lowtechcyclist: I think we’re overdue for a Colorado meetup, so how much interest is there for something later this summer?
Miss Bianca
@Scamp Dog: I might could go for it!
lowtechcyclist
@Scamp Dog:
Much as I would love to fly out to Colorado for any reason, let alone for a meetup, I’m afraid it’s not in the cards for 2023.
Now a MD or DC or Northern VA meetup, that I’d be up for!
Roger Moore
@Barbara:
Arrogance is a hell of a drug.
Barbara
@Yarrow: I agree, I just don’t know of an easy fix that would cover a change in jobs. I could see within the parameters of the exchanges making carry over required for exchange participants. The risk of a carrier going bankrupt is sufficiently negligible that it is unlikely to move the needle much. It’s just hard to do it retrospectively if the requirement doesn’t currently exist.
jimbales
@Barbara: My suspicion is that the necessary rules/regulations are not in place. I would hope that regulators, going forward, could to require all insurers being liquidated by regulators during a plan year have to reimburse all out-of-pocket expenses back to their insured, and that this obligation would be treated as being just as important as paying outstanding bills from providers.
David, of course, can give us a sense of how practical that might be to put in place!
Best
Jim
pluky
@Ruckus: They tried to buy market share by underpricing their offering. As someone recently retired from a 35 year career as a Group Medical/Disability pricing actuary, let me assure you that is a recipe for disaster!
Madame Bupkis
@Scamp Dog: I’m in!
David Anderson
@Jim Bales: there is no cash there to claw back .. that is the trigger.
Any dollar that is attached to the Friday Colorado subsidiary will be used to pay claims. At this time there is no one working for Friday (all got laid off from janitor to CEO a few weeks ago) and the office furniture is likely gonna be up on EBay soon….
elliottg
Kaiser has a lot of money. They have fewer coke-sniffing, hooker-patronizing executives meaning they sometimes (not always) try to do the right thing. Their retention/pricing models are much better than the industry as well so they might have even priced it out.
Lobo
David,
Would it be better to have the government provide basic insurance and private companies provide catastrophic insurance or vice versa?
David Anderson
@Lobo: if you can get the votes I am on board with government gives a baseline plan with private buy up