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Vt. Health Co-Op  In ICU

State Official Dashes Reopening Application

Montpelier — Vermont Health Co-Op officials demanded last week that a state regulator “reconsider” her rejection of the nonprofit’s license to operate in Vermont.

Susan Donegan, commissioner of the Department of Financial Regulation, says reopening the co-op’s existing license application is not an option.

“I think there’s this idea that all I have to do is wave my hands and change my decision,” Donegan said. “The statutes are there for a reason. The commissioner does not have unfettered abilities.”

Her decision, which alleged that the co-op would face insolvency within three years, is a final order. Under state statute the Vermont Health co-op can only seek recourse in one of two ways: It can file a new application or appeal the department’s decision to the Vermont Supreme Court.

“I would certainly understand if they wanted a review,” Donegan said. “I would follow the Court’s direction. I’m a lawyer. I find guidance from the Court useful.”

Either way, the co-op faces time pressures that could make it nearly impossible for the newly formed member-owned company to provide consumers with insurance products by Oct. 1 when the enrollment period opens for the state’s health care exchange.

Reapplying for a license is a months-long process. Donegan said under the best of circumstances regulatory review would take six months, before the co-op can seek rate approval. The department’s review of the original application took 18 months. A new application would also have to go through an actuarial analysis

“We can have all the greatest intentions in the world, but I can’t manufacture more time, Donegan said. “It’s like getting to the airport when the plane takes off and saying wait a minute, I’m not on the plane. Yeah, but the plane took off.”

If the co-op wants to appeal the decision to the Vermont Supreme Court, it must file an appeal within 30 days of the commissioner’s May 22 decision.

Not Ready to Concede Defeat

Neither option is palatable to co-op officials who opted last week to take their case to the court of public opinion. They held a news conference in which Christine Oliver, CEO of the company, blasted Donegan.

Co-op officials say they were stunned by the state’s rejection, and they hope to submit a revised license application to the state.

“To say we were blindsided by this is an understatement,” Oliver said. “There is no honest way to link our last communication with the Department of Financial Regulation to the decision that was issued.”

Oliver, a former insurance regulator for the state, demanded that the commissioner “reconsider” her decision to deny the license. “The recent decision by DFR includes many inaccurate statements,” Oliver said. “It’s so wrong on so many levels, it’s hard to know how to defend the situation as it stands today.”

Mitch Fleischer, president of the co-op board, emphasized that competition in the health insurance market is good for consumers. “Believe me, it makes status quo better; it sharpens what other companies do; it’s really a win-win for everybody at the table.”

This week Oliver said she is not ready to concede defeat, but her stance was more conciliatory. “Everything is on the table,” she said. “We’re looking at the entire structure to determine the best path forward.”

Oliver is now trying to figure out how to revised the co-op’s application, and is still holding out hope that the co-op will be ready for the open enrollment deadline on Oct. 1.

Projected Insolvency Concerns Sited

In its 37-page decision, the Department of Financial Regulation determined that the Vermont Health CO-OP would have cumulative losses of about $9 million in the first three years of operation, from 2014 to 2016 if it achieves 50 percent of its target enrollment.

The Centers for Medicare and Medicaid Services awarded the Consumer Operated and Oriented Plan $6 million in start-up loans and $27.4 million in solvency loans last year. The department says the federal money isn’t enough money to protect consumers from a disruption in the market should the co-op go bankrupt.

Insolvency, Donegan said, potentially puts Vermonters at risk, and “that’s certainly not a company I will license. If solvency is in jeopardy, you’re not protecting consumers.”