One day, it’s a functioning business. The next, it’s gone — and customers are left holding the bag.
So-called “exit scams” are becoming more common in an era where buying from a store across the ocean can be more convenient than walking to the neighborhood grocery store.
But the case of Health Connections, a New Mexico-based Obamacare Co-Op, may be the first instance of an exit scam pulled by an Obamacare provider.
As detailed in the Albuquerque Journal, the company, which serves 18,000 New Mexicans and has received millions of dollars in federal loans, appears to have unloaded all of its valuable assets in a fire sale to Evolent Health, a Virginia-based conglomerate, leaving only its liabilities behind.
And shortly after the fire sale, Health Connections’ entire senior management team also departed for Evolent.
The incident is a major red flag for the already flailing Obamacare Co-Op system, and raises significant questions, including:
– Health Connections is a federally subsidized non-profit. Evolent, the new corporate home of Health Connections’ entire former management team, is a for-profit company. How much of the value of Evolent’s new acquisition did taxpayers pay for?
– Selling the assets of a nonprofit at a steep discount to a for-profit company that you are also hired by shortly thereafter is a breathtaking conflict of interest for a corporate officer. It’s obviously wrong, but does it violate any federal or state laws? If not, what can Congress do to ensure this doesn’t happen again?
– What will happen to Health Connections’ policyholders, now that their insurance company, which were offered on a platform provided by and partially paid for by the federal government, pulled an exit scam?
– What amount will taxpayers be on the hook to cover Health Connections’ liabilities? How much less would it have been if the organization’s management had acted in its best interest?
– Will this situation repeat itself? Obamacare Co-Ops are failing all across the country. If the incentives made sense for an exit scam in New Mexico, you can bet they will elsewhere, too.
– Are there emergency steps Congress can take to prevent similar situations from taking place in the near term while longer-term reforms are considered?
Obviously, Obamacare is a partisan, polarizing issue. But I hope we can all agree it’s not right to take millions from the government to build up a non-profit, then loot it, while tens of thousands of ordinary people suffer. I’m sure the millions of dollars Evolent paid to ransack Health Connections’ was tempting for Health Connections’ management, like former CEO Martin Hickey (and the just-announced CEO of a for-profit Evolent-spinoff called True Health New Mexico), but that doesn’t make it right – or something the rest of us should stand for.
Congress should begin investigations into this situation immediately before potentially millions of other people are left holding the bag.