Colorado’s only managed-care health insurer for Medicaid patients lost a record $7.6 million in the first half of 2005, leaving the company – Colorado Access – short of state-mandated cash reserves, company executives said.
The loss for the first six months last year was about $1.1 million. The company lost a total of $7.4 million for all of 2004, according to a company statement of revenue and expenses.
The problem was not bureaucratic tangles, or the state’s troubled computer system, but an increase in patients needing costly care, said Don Hall, Colorado Access’ chief executive.
“We were just hit with very sick people,” Hall said. “Beginning in January, there was a tremendous increase in the number of people who are very ill.”
Those costly illnesses included organ transplants and premature babies who required intensive care, Hall said.
The number of Colorado Access clients with serious ailments is growing because of changes in Medicaid enrollment practices, Hall said.
Colorado Access covers 147,753 Medicaid recipients. Until two years ago, the state automatically assigned Medicaid patients to a health maintenance organization. Now, the majority are referred to Colorado Access by doctors who are treating them.
And if patients have been referred by doctors, it is because they are probably sick, Hall said.
The Medicaid insurer had $10 million in medical charges in the first half of 2005 – more than 10 times as much as they paid in the same period in 2004, according to company reports.
Several years ago, Colorado contracted with a half-dozen HMOs that provided coverage for Medicaid patients.
As the state has moved away from an HMO system for Medicaid, that number has dwindled to one – Colorado Access.
The state requires insurance companies to maintain cash reserves to be used to pay members’ medical costs should the company go out of business.
With its loss so far this year, Colorado Access is about $4 million short of what the state requires it to have on hand.
The company’s capital and surplus dropped to $7.2 million for the first six months of 2005, compared with $27.5 million for the same period in 2004, according to company filings.
The company’s finances are not in jeopardy, Hall said.
“We did get a nice rate increase from the state beginning July 1,” Hall said. “For July we actually made money, so things are looking up.”
