Health insurer Land of Lincoln's shutdown could jeopardise obamacare

The Illinois Insurance Department moved on Tuesday to shut down Land of Lincoln Health because of its unstable financial health, which could hit 49,000 policyholders coverage in the coming months.

According to commentators, the collapse of the insurer was a significant setback for the Affordable Care Act, as Obamacare is called, in Illinois.

The insurer was among 23 non-profit cooperatives nationwide set up under the federal health law to provide cost-effective coverage and competition in state insurance markets. Failure of the Land of Lincoln, had shrunk the list of co-ops to seven.

However, neither regulators nor the company have said exactly when Land of Lincoln Health would be shut.

Policyholders would be able to buy insurance from a different carrier to cover them for the rest of 2016, the state insurance department said. However switching plans would entail costs.

The co-pays and deductibles enrollees that had been paying since January would not transfer new plans. Also a new plan would reset deductibles and out-of-pocket maximums paid by consumers.

The Chicago Tribune quoted Stephani Becker, a health-care policy analyst at the Chicago-based Sargent Shriver National Center on Poverty Law, "This could be very disruptive for people who either liked Land of Lincoln's provider network or had met their deductible and other out-of-pocket limits."

A 3-year-old startup, Land of Lincoln Health, lost $90 million in 2015 and over $17 million through 31 May.

According to Illinois Department of Insurance officials, they were seeking a court order allowing the state to take over Land of Lincoln Health and prepare the company for liquidation.

The department's acting director, Anne Melissa Dowling, would work with the federal government to set a 60-day special enrollment period for Land of Lincoln policyholders to find and purchase new health coverage.

Over the period of transition, policyholders would need to continue to pay their premiums to maintain their coverage and healthcare providers would need to honour their contracts for service to patients, according to a department news release.