Colorado-based health insurer Friday Health plans is shutting down
Friday Health Plans, a health insurer that covers more than 30,000 people who buy coverage on their own in the state, announced Thursday that it will cease operating.
The announcement comes after Colorado-based Friday, which had operated in seven states, ran into financial troubles in Texas that cascaded throughout the rest of the company. In a statement posted on its website, Friday said that it had grown “incredibly quickly” but had been “unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital required to run our business.”
“While we are deeply disappointed, we agree with the decision of our state regulators that it is necessary to wind down Friday’s business operations over time in accordance with the regulations in the states where we are operating,” the company said.
As its financial troubles mounted, Colorado regulators last month prohibited Friday from enrolling new members in the state. On Thursday, Colorado Insurance Commissioner Michael Conway said he is optimistic that Friday’s Colorado operations are financially stable enough to continue paying member claims through the end of the year.
But the announcement means that Friday’s Colorado customers will need to pick a new insurance plan next year. Friday covers about 30,000 people who signed up for insurance through the Connect for Health Colorado exchange — about 15% of the roughly 200,000 people total who used the exchange to buy insurance during the most recent open-enrollment period.
“This is happening across the nation,” Conway said of Friday’s fall. “So this isn’t happening because of anything that’s happening in Colorado. It’s happening because the parent company is failing.”
Friday’s demise was a long time coming. Late last year, the company announced that it was pulling out of Texas and New Mexico, leaving it to offer plans in only five states for 2023. Earlier this year, regulators in Texas seized and began liquidating the company’s assets in that state. The company’s operations in Oklahoma were placed under the supervision of regulators in that state last month, and regulators in Georgia placed the company’s operations there into receivership earlier this week.
Friday is a relatively new face in the normally stodgy world of health insurance, having launched in 2015. It had a large base of operations in Alamosa following its 2017 acquisition of Colorado Choice Health Plans.
The company, which is for-profit, grew rapidly through rounds of capital investment, and it sought to use technology to operate more leanly while also aiming to be more consumer friendly. In that way, it is similar to two other insurance newcomers whose financial struggles led to them pulling out of Colorado — Oscar Health and Bright Health.
Conway said that Friday operated with a parent company and state subsidiaries that were somewhat separate from one another. That structure for a time allowed Friday’s Colorado branch to remain solvent even while other state branches hit turmoil.
“We’re walled off from the issues going on in the individual states unless and until those issues start to impact the parent company,” he said.
So, while he said that Colorado regulators have for months been watching Friday’s finances with some concern, there was no need until recently to take action.
In a statement, Kevin Patterson, the CEO of Connect for Health Colorado, assured people who are covered by Friday for 2023 that their coverage should continue through the remainder of the year.
“Connect for Health Colorado is staying closely aligned with the Division of Insurance as they continue to evaluate Friday Health Plans’ situation in Colorado,” Patterson said. “I encourage any current customers with questions to reach out to their assister or broker. We’re here to help.”
If Friday cannot make it until the end of the year, the Colorado Life and Health Protection Association would step in to help Friday’s members cover medical costs up to $500,000 each. As Friday teetered earlier this year, Colorado lawmakers made changes to the association’s governing statute to ensure Friday’s plans would be covered by the association’s protections.
Friday did not immediately respond to an email seeking additional comment.
Source: The Colorado Sun
