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Minuteman Health won’t relaunch as for-profit

Minuteman Health Inc., a small Boston-based health insurer, has failed to raise enough money to continue selling plans next year, forcing thousands of people in Massachusetts and New Hampshire to find new health insurance for 2018.

Minuteman is structured as a nonprofit. Executives said in June that they were winding down the nonprofit company at the end of 2017 and planned to relaunch under a new for-profit structure next year.

But on Wednesday, the deadline for Minuteman to seek approval to sell plans on state insurance exchanges in 2018, executives acknowledged that they had not reached that goal.

Insurance companies are required by state regulators to keep a certain level of cash on hand to pay claims. Minuteman does not have enough to sell plans in 2018.


“Today, despite the incredible efforts of many people, [Minuteman] was unable to meet the deadline to secure licensing approval to participate in the Exchange program for 2018,” chief executive Tom Policelli said in a statement. “While we had many productive conversations with potential funders, ultimately the chaotic atmosphere in Washington and volatility driven by the Risk Adjustment program proved too much for funders to make a long-term investment at this time.”

Risk adjustment is a federal policy that requires insurers with healthier members to pay money to those with sicker members. Minuteman executives blame the policy for much of the company’s financial challenges.

Minuteman currently sells plans on the insurance exchanges in Massachusetts and New Hampshire. It has about 37,000 members, most of them in New Hampshire.

Earlier this month, the acting Massachusetts insurance commissioner, Gary D. Anderson, took control of Minuteman because of its ongoing financial issues. The state Division of Insurance said Minuteman’s cash level was too thin but said it had enough money to pay claims for the remainder of 2017.


Minuteman is the first health insurer to be in state receivership in 17 years.

Chris Goetcheus, a spokesman for the Massachusetts Division of Insurance, said Minuteman’s members will need to select a new health insurer for 2018 during the open enrollment period that begins Nov. 1.

“In the meantime their [Minuteman] policies remain in effect and claims will be paid in the normal course of business,” he said in a statement.

Jason Lefferts, a spokesman for the Massachusetts Health Connector, the state’s insurance exchange, said the agency would work to create a smooth transition for Minuteman members who need to buy new coverage. He said they should be able to choose from 51 plans next year, offered by eight other insurers.

“We will talk directly to current Minuteman members as we get closer to Open Enrollment to ensure they have a health plan that meets their needs for next year,” Lefferts said in a statement.

Although the company has failed to get approval to sell plans to individuals next year, Policelli said it will seek to provide services to large self-insured employers. Such employers bear their own insurance risk and typically hire insurance companies to help administer their health plans.

In New Hampshire, Minuteman is one of just four insurers on the state exchange, and covers about 27,000 people.

“While we had hoped that Minuteman’s leaders would be successful in their attempt to form a new company for 2018, we understand how difficult it is to form a new health insurance company, especially in such a compressed time frame,” New Hampshire Insurance Commissioner Roger Sevigny said in a statement.


Minuteman launched in 2013 under a provision of the Affordable Care Act designed to create affordable new insurance options for consumers. Its launch was funded with $156 million in federal money.

It is one of several CO-OPs, or consumer operated and oriented plans, that launched nationwide under the law. But these plans faced a variety of challenges, and many failed.

Minuteman sought to offer insurance policies to cost-conscious consumers by contracting with some of the state’s less expensive doctors and hospitals. Minuteman sued the federal government over the risk adjustment policy last year, calling it flawed and illegal.

Policelli, Minuteman’s chief executive, told the Globe in June that the regulations for small nonprofit insurers were preventing the company from growing membership substantially. He said Minuteman would be able to grow more if it were structured as a for-profit.

Since its founding, Minuteman has remained a small player in the Massachusetts health insurance market, going up against more established players that have more than 1 million members each.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.