Charleston Post and Courier
October 23, 2015

By John McDermott

A North Charleston-based health insurer that provides coverage for about 67,000 individuals and small businesses in South Carolina is shutting down because of a sharp cut in reimbursements from the Affordable Care Act.

Consumers’ Choice Health Insurance Co. has agreed to a voluntary “run-off” and will not sell policies for 2016, the S.C. Department of Insurance said Thursday.

The nonprofit cooperative will continue to pay out existing claims. The department said the carrier agreed to wind down operations because its “financial condition could worsen significantly” if it continued.

“This was a difficult decision for the insurer and this agency, but this is what is in the best interests of South Carolina consumers and health care providers,” said Ray Farmer, director of the Department of Insurance.

Consumers’ Choice also has offices in Columbia and Greenville. It was created in response to the ACA, or Obamacare. It enrolled its first customers about two years ago.

The company blamed its planned shutdown on a steep drop in reimbursement money from the federal government. Insurers had sought $2.87 billion in so-called risk corridor payments for 2014, but it was recently announced that they will only receive $362 million, or 12.6 percent of the request. Those funds were designed to ease the impact on companies of taking on uninsured customers.

The reduction “cast doubt on the collectability of tens of millions of dollars through the federal risk corridor program and led to an unavoidable outcome,” Consumers’ Choice CEO Jerry Burgess said in a written statement.

The company’s Tennessee-based sister cooperative, Community Health Alliance, is shutting down for the same reason.

Frank Knapp, CEO of the S.C. Small Business Chamber of Commerce, said the ACA co-ops are a good idea, but the sudden drop in federal reimbursements “pulled the rug out” from underneath them and “obliterated” their business plans. He also predicted that “most if not all will close their doors.”

Premiums are likely to rise for ACA policyholders “due to less competition,” Knapp added.

Twenty-three health insurance cooperatives were formed under Obamacare. Consumer’s Choice is the ninth to fold.

“In the coming days, weeks and months, Consumers’ Choice will continue to focus all of its efforts on taking care of its members and also working with the … Department of Insurance as well as the Centers for Medicare & Medicaid Services to help ensure a smooth transition,” said Tim Ervolina, board chairman for the company.

The co-op was one of four carriers that was selling plans this year on the federal marketplace to South Carolina customers. The others are BlueCross BlueShield of South Carolina, the largest private health insurer in the state, and its licensee, Blue Choice, along with Coventry Health Care.

What’s next?

Some questions and answers about the closing of Consumers’ Choice:

Q: How will the closing affect my current insurance coverage?

A: Current plans will continue uninterrupted through Dec. 31. Members can submit claims for medical expenses incurred through the end of the year.

Q: Do I need to keep paying premiums?

A: Yes. Continue to pay through December to maintain coverage.

Q: When can I get a replacement policy for 2016?

A: During the next enrollment period, which runs Nov. 1-Jan. 31. Consumers should enroll by Dec. 15 to have insurance on Jan. 1.

Q: Where can I get help finding a new policy?

A: If you are receiving federal subsidies, you must enroll in a Qualified Health Plan through the Federal Marketplace. You can shop for a new plan by working with an agent, broker or navigator or by calling 1-800-318-2596. Plans can also be reviewed at

Q: Can I continue to see my doctors and have my prescriptions filled?

A: Yes. The provider network should remain in place through 2015. When shopping for new coverage, check the network directories for other companies to ensure your doctors and preferred facilities are members of those networks.

Q: What if I have questions?

A: Call Consumers’ Choice at 1-800-580-8736.

S.C. Department of Insurance

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