SOUTH BURLINGTON -- Officials of newly formed health insurance cooperative created to offer health insurance to Vermonters as part of the federal health care reform package are going to ask the state’s top insurance regulator to reconsider her decision to deny the co-op a license to operate.
Vermont Health Co-op CEO Christine Oliver said Wednesday the rejection of her organization’s application last week by the commissioner of the Department of Financial Regulation was filled with "inaccurate and misleading statements."
"We entered the licensure process in absolute good faith. We worked through that process for 10 months. To say we were blindsided by this decision is an understatement," Oliver said during a meeting with reporters at the organization’s South Burlington offices. "There was really no honest way to leap from our last communication with the Department of Financial Regulation to the order that was issued."
The co-op was formed under the Affordable Care Act. It has received roughly $33 million in federal loans. Nearly $7 million has been used for startup costs with the remaining $26 million allocated to a reserve fund. It hopes to begin offering insurance to customers on a new state exchange on Jan. 1.
Oliver said she did not know how her organization and Financial Regulation Commissioner Susan Donegan could have reached such different conclusions about the health of her organization and its potential for being able to offer health insurance to Vermonters who wanted another option beyond the two health insurers already operating in the state.
In a meeting with reporters on Wednesday, Oliver and board member Mitch Fleisher rebutted many of what Donegan felt were shortcomings in the co-op’s application to be certified to sell health insurance.
In her decision, Donegan said she felt the rates proposed by the co-op were too high and not competitive and that the co-op’s projected enrollment projections were too optimistic and it wasn’t clear the organization could repay its federal loans. She also wrote of what she felt was a possible conflict of interest because Fleischer’s company has a contract with the co-op.
Oliver said the proposed rates were "placeholders" and not final.
"Those were a placeholder to get the conversation started," she said. "We repeatedly advised DFR our rates would be modified, that we would take action to modify them ourselves."
Oliver said federal authorities were aware of the co-op’s finances and considered them sound.
"The illusion that there is a risk to Vermont consumers is patently false," Oliver said.
And she and Fleischer acknowledged that Fleisher is the chairman of the board and a company he owns does business with the co-op. The details of the contract are well known and the federal officials are also aware of the contract and no one, other than Donegan, sees a conflict, Oliver and Fleischer said.
"Everything we’ve done to date has been pre-approved by the federal government," Fleischer said.
Oliver and Fleischer said their first recourse would be to ask Donegan to reconsider her decision.
The law allows them to appeal to the Vermont Supreme Court, but that route is not their priority.