Health insurance company Bright Health announced Tuesday that it won’t offer insurance plans in Colorado next year, meaning roughly 55,000 people in the state will need to find new coverage.
The decision is part of a move by Bright to pull out of every state in which it operates but two — Florida and California — as it struggles for profitability.
“The changes announced today give Bright Health a strong and stable platform for profitable growth at much lower risk,” Mike Mikan, the president and CEO of Bright Health Group, said in a statement.
Bright currently offers plans in Colorado on the individual and small group markets, where people buy coverage on their own or where small businesses buy coverage for their employees, respectively. In addition to Colorado, Bright will no longer offer coverage in Alabama, Arizona, Georgia, Nebraska, North Carolina, Texas and Tennessee, and it will drop coverage for certain types of plans in Florida.
But the shockwaves will echo especially loudly in Colorado because Bright is intertwined with a major health reform initiative backed by the administration of Gov. Jared Polis. Bright is the carrier that offers plans for the Peak Health Alliance, a pioneering “health care purchasing alliance” that unites members of a community to directly negotiate lower prices with local hospitals. As Peak’s selected insurance carrier, Bright then bundles those prices into insurance plans for Peak members. Peak started in Summit County and currently operates in eight western Colorado counties.
Anne Ladd, the CEO of the Peak Health Alliance, said she learned of Bright’s decision to leave Colorado at 5 a.m. Tuesday via a company news release. She said the move means that Peak will not be able to offer plans in 2023 because there is not enough time to team up with a new insurer. Ladd said Peak plans to return in 2024.
“In my mind, this creates an opportunity for us to start fresh,” Ladd said. “It creates an opportunity for us to come back with a very strong partner.”
Bright’s rise in Colorado
Bright is a relatively new player in the health insurance world, a startup that first offered plans in Colorado in 2017.
Its partnership with the Peak Health Alliance began in 2020, after Peak selected Bright to be its insurance partner in the individual market following a bid process. The initial results were astonishing. Peak’s plans, offered by Bright, came in at an average of 41.5% below what people in Summit County had been paying, though some of that reduction was due to the state’s reinsurance program, which was also new.
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At a news conference in 2019, Polis said that a family of four in Summit County would be able to save $14,000 annually. Colorado Insurance Commissioner Michael Conway said there were tears in the audience when the number was announced at a Peak launch party in Summit County, where residents had been paying some of the highest health insurance premiums in the nation, often higher than their mortgage payments.
Polis soon began talking about taking the health care purchasing alliance model statewide. In addition to more affordable care, Peak’s plans also offered better deals on mental health care coverage.
A $1 million fine
But as enthusiasm for the purchasing alliance model grew, frustrations with Bright mounted in Colorado’s high country. Independent clinics said Bright was slow to pay them — or denied claims that it shouldn’t have.
“The facts of it are that Bright Health has had severe and persistent problems paying claims for their insured patients (and) for services that we and other providers in the community have rendered to their insured patients,” Dr. Andrew Catron, the co-owner of Swan Mountain Women’s Center in Breckenridge, told the Summit Daily News last year.
The state’s Division of Insurance began investigating and earlier this year slapped Bright with a $1 million fine over complaints of failing to pay claims and an inability to accurately process claims.
Kate Harris, the state’s deputy commissioner for life and health insurance, said this summer that her agency heard complaints about Bright from both consumers and from medical providers. She said most of the unpaid claims complaints were for small numbers — a few hundred here and there. But for some providers the total amount of unpaid claims stretched into the tens of thousands of dollars.
“The length and the breadth of what we were hearing in terms of the provider complaints was what drove our enforcement action,” Harris said.
The state fine was split into two halves. The first $500,000 was assessed immediately when it was issued in April. The second $500,000 can still be avoided if Bright meets a series of requirements to pay off its overdue claims and improve its claims-processing systems before it leaves, Conway said Tuesday.
A 21% rate increase
Amid the turmoil over the fine, Bright came out with another eye-popping number: A requested 21% premium price hike for next year in the individual market.
The requested increase was the second largest in preliminary rates that companies filed with the state back in the spring. The Division of Insurance must approve rates in the individual market each year after hearing public comment and conducting its own analysis.
In addition to the price hike, Bright announced at the time that it would drop coverage in the small group market in Colorado.
Conway said that, after the Peak Health Alliance dug into Bright’s rates and submitted comments to the Division of Insurance, he was prepared to knock the proposed rate increase down by about a fifth. Final rates for 2023 are expected to be released next week.
But that’s all moot now that Bright announced it won’t be offering plans in the state next year. Because Bright’s decision to pull out of Colorado is based on its financial instability, Conway said there will be no penalties attached to the late announcement.
“We would be potentially putting policyholders at risk if we allowed them to go into the next plan year in their financial position,” Conway said.
Conway said he does not believe that Bright’s dealing with state regulators is what is causing it to back out of Colorado.
“They’re pulling out of the entire country,” he said. “It’s not that they didn’t get the rate increase that they requested here.”
What’s next for Peak
While acknowledging that Bright’s departure is a setback, both Conway and Ladd said that they expect the Peak Health Alliance to emerge stronger in 2024.
“Everything about the fundamentals of the model still absolutely work,” Conway said.
Ladd said Peak expects to have enough money to not have to lay anyone off over the next year, while it works to find a new insurance partner. She said the alliance had previously been talking with potential new insurers as it looks to expand its membership into Routt County.
“We are already in conversations with new carriers and so those conversations will expand,” Ladd said.
Peak members will need to find new coverage for 2023 when open enrollment begins on Nov. 1. Conway said Bright’s departure won’t significantly change the health insurance landscape in the state — no counties will be without an option on the state health insurance exchange and every county but one will have at least two choices.
Ladd said Peak will continue to work for better health care coverage and services for the people in its communities.
“We have every intention of moving full speed ahead,” she said.