May 09--Land of Lincoln Health, a Chicago-based insurance startup, said Monday it will look to raise money from outside investors to address the financial challenges it faces after suffering heavy losses in the first two years of the Affordable Care Act exchange in Illinois.
The fundraising was made possible after the Obama administration late Friday loosened restrictions on struggling insurers created by the health law. The Affordable Care Act established a loan program to set up private nonprofit health plans to compete on insurance exchanges where consumers without insurance could buy coverage. The loan program outlawed private capital.
But the startups, like established insurance companies, have had growing pains with the exchange-based plans because they have attracted very sick people. About half of the 23 startups established by the health law have collapsed.
The others, including Land of Lincoln, are struggling to survive. The Centers for Medicare Medicaid Services, which administers Obamacare exchanges, adjusted some of its regulations to give the startups more flexibility to raise private capital. CMS said the rule changes were needed because of the financial hardships facing the startups and lack of further federal funding.
Land of Lincoln lost $90.8 million last year on revenues of $147.4 million. The Metropolitan Chicago Healthcare Council, a hospital trade group, received $160 million in federal loans to launch Land of Lincoln.
Jason Montrie, Land of Lincoln's president and interim CEO, said the company was pleased with the rule changes and "will be actively engaged in finding the right capital opportunities to help us meet our mission."
asachdev@tribpub.com
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