Why Colorado Is Taking A Gamble With Failing Insurer Friday Health Plans

Regulators in Colorado believe failed health insurance will collapse less quickly here than in other parts of the country.

The concern is Friday Health Plans, the new for-profit insurance company that aims to use technology to be more efficient and consumer-friendly. Industry analysts refer to these types of companies as "insurance companies."

After raising hundreds of millions of dollars in mutual funds on Friday, the bubble burst earlier this month, continuing the trend of new entrants into the government insurance market.

Colorado regulators are hoping to get into the state on Friday and continue enforcing the claims through the end of the year. If you can, that means Friday Colorado customers don't have to buy a new insurance plan this year and end up in the unenviable position of having to pay two deductibles in the same year.

Insurance Commissioner Michael Conway said Friday the Colorado branch had enough liquidity to continue through the end of the year.

"They have the capital to repay the fees that we expect to pay over the next six months and until they are exhausted," Conway said.

That's not the case elsewhere, with Georgia and Nevada recently joining the state cavalry in placing their local counties under receivership and liquidating their assets on Friday.

But Conway's testimony brings with it two major caveats. First, regulators need to verify that Friday's Colorado department actually has the funds it's asking for. Conway said his team is working on it now.

The second caveat is that even if Friday has enough local cash to pay his members' medical bills, it's still difficult if the parent company can't pay for all the different vendors they use to process those claims claims. That concern was voiced by national health expert Ari Gottlieb.

"The right thing for Colorado is to follow Georgia's lead and embrace the plan and then scrap it," Gottlieb, director of A2 Strategy Group, told Fierce Healthcare. "Basically, they're hoping that the billing will work out and the providers will continue to offer the plan, even though they probably won't get any money.

"Colorado regulators are trying to make it work for state members, but it's hard to tell how well that decision will turn out."

Gottlieb could not be reached for further comment. Conway said Colorado is working with other states on Friday to find a solution to the problem.

"It costs a lot of money to get into the insurance business."

Friday is just the latest insurtech to hit the market both in Colorado and across the country.

Two others, Bright Health and Oscar Health, pulled out of the Colorado market late last year due to the statewide fight. Bright and Oscar also at a profit.

Headquartered in Colorado, Friday has a large office in Alamosa thanks to its 2017 acquisition of St. Louis-based nonprofit insurance company Colorado Choice Health Plans. Louis Valley focus. Therefore, Friday's accident in Colorado has taken on greater significance as it meant the loss of hundreds of jobs in Alamosa.

But the story is broadly the same for all insurers: their misery is about the cold, impenetrable reality of the health insurance world.

"It takes a lot of money to get into the insurance business," said Paul Ginsberg, a professor of health care policy and management at the University of Southern California, who has extensively researched the insurance market.

The biggest players in the market - companies like Anthem, Kaiser Permanente, and United Healthcare - have decades of experience along with large reserves and long-term relationships with the hospitals and doctors you need to do business with. To offer affordable plans.

Acting like Silicon Valley startups, insurtechs are trying to break into the world of health insurance heavyweights with technology and bold venture capital funds to give them much-needed savings. (Insurance companies in Colorado and other states are required to have a minimum amount of cash in the bank to cover claims up front and protect against emergencies like a global pandemic.)

They are often advertised as fresh, easy to use, and affordable. They have specifically targeted their products to the individual market, where people buy their own insurance and often search for health insurance on exchanges such as Amazon. Surveys have long shown that price is the number one concern for the vast majority of people shopping in retail stores.

This differentiates the individual market from the group markets where companies buy plans for their employees. In these markets, the reputation of the insurance company and the network of doctors and hospitals is of great importance.

"You don't need that reputation or that network size to get into the retail market," said Rick Rush, a healthcare actuary and managing partner at consulting firm Gerrick. "You just need a competitive price."

But as Friday's experience shows, the insurance industry can be a tough place to survive, even when you're thriving.

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