Evergreen Health, a Baltimore-based insurer created to sell coverage on Maryland’s health exchange, is to be liquidated and all members’ policies are to be canceled at the end of September after a judge ruled that the company is insolvent and regulators determined there are no viable investors.
The decision by Baltimore Circuit Judge Yolanda Tanner last week will leave about 24,000 Evergreen customers looking for new coverage by the end of the month. Tanner ordered a special 30-day enrollment period, which began Sept. 1, during which Evergreen members may choose a new plan.
Aetna, CareFirst BlueCross BlueShield, Kaiser Permanente, and UnitedHealthcare have agreed to offer plans during the special enrollment period. The coverage will be effective retroactively to Sept. 1.
“Nobody should lose coverage,” Maryland Insurance Commissioner Al Redmer Jr. said. “All of this was done in an effort to protect policy holders and ensure they do not lose coverage.”
Evergreen was ordered by the state insurance administration to stop accepting new members and begin winding down business in July, after a group of investors who had planned to buy the company backed out.
Evergreen was supposed to continue offering coverage and paying claims for current members until their policies expired, a process expected to take about a year. Once the policies expired, members would have to pick a new insurer. Risk & Regulatory Consulting Inc., the Connecticut firm assigned by the Circuit Court to handle the process, would have then finished paying out claims and liquidated any remaining assets.
The drawn-out approach was intended to maintain Evergreen’s business and buy the state time to vet potential investors to some or all of the company’s assets — reforming the company, rather than shutting it down.
But regulators ultimately concluded there were no viable investors.
“While we had a couple different groups kicking the tires and looking at potentially buying all or part of Evergreen’s assets, no offer ever materialized,” Redmer said. “My hope was we were never going to get here.”
Without the possibility of an influx of cash, Risk & Regulatory Consulting concluded Evergreen would not be able to support its business or continue paying members’ claims, and sought a judge’s permission to liquidate the company.
The company is still responsible for paying any claims for services before Sept. 1, when members’ new plans will take effect.
Evergreen was one of 23 consumer-oriented and operated health co-ops created under the federal Affordable Care Act as a way to inject more competition into the insurance marketplace and serve as a new option for individuals buying insurance through the law’s new online insurance exchanges.
All but a few have gone out of business or are being wound down, unable to withstand the financial and regulatory strain of starting an insurance company from scratch.
Evergreen was hamstrung by a program that required it to pay $24 million to insurers with sicker members last year.
In a bid to shore up its finances and stay in business, the company sought to convert itself to a for-profit insurer that could be sold to a group of investors. It was released from the federal co-op program last year in exchange for repaying $3.2 million of its $65 million federal startup loan and forfeiting $30 million it was due from another federal program.
The prospective buyers — LifeBridge Health and Anne Arundel Health System and a group of private individuals — backed out of the deal over the summer, and Evergreen went into the state’s receivership program.
“It’s a very unfortunate end to a very promising alternative to other insurance carriers,” said Dr. Peter Beilenson, the former Baltimore health commissioner who founded Evergreen. He has not been involved with the company since it was taken over by the third-party receiver.
In addition to offering insurance, Evergreen operated a network of health offices and employed doctors that could have been assets to another health care company, said Jonathan Weiner, a professor of health policy and management at the Johns Hopkins University’s Bloomberg School of Public Health.
Uncertainty about the future of Obamacare under President Donald Trump and a Republican-led Congress might have soured potential buyers’ appetite for taking on a new investment, he said.
“In general there aren’t a lot of health care organizations that are willing to take risks right now,” Weiner said.
The process has been hard on Evergreen’s members.
After learning she would not be able to renew her company’s health policy with Evergreen, Paula Fargo started working with her insurance broker to line up new options for the 15 employees of her Baltimore print shops, Curry Printing and Copy Cat Printing.
She hadn’t been planning to make the switch until November.
“We’re going to be scrambling,” she said.