Gambling on Obamacare exchange cost ND company nearly $73M, CEO

By Rob Port | Watchdog.org North Dakota Bureau

FARGO, N.D. — After reporting tens of millions in losses — the bulk stemming from a subsidiary hired by Maryland to create the state’s Obamacare exchange — Blue Cross Blue Shield of North Dakota announced Monday the termination of CEO Paul von Ebers.

“The board felt it was necessary to make a change at the CEO position in order to ensure confidence in the future financial direction of our organization,” Ann McConn, president of the company’s board of directors, said in a statement, which indicated that no further comments about the termination would be made, citing privacy.

The financial losses totaling $72.9 million were reported last week to state Insurance Commissioner Adam Hamm’s office and came in significantly higher than the $17.1 million in losses the company projected as late as February.

The company was part of a lobbying effort to create a state exchange during North Dakota’s 2011 legislative session, something lawmakers rejected. But a subsidiary, Noridian Healthcare Solutions, was awarded a contract in Maryland to build that state’s exchange under the Affordable Care Act. The exchange was never functional; Noridian was fired in February and is now embroiled in a legal battle with EngagePoint, a company brought in as a subcontractor on the project.

Of BCBSND’s losses, $51 million were attributable to Noridian Healthcare Solutions.

“NHS does believe that it still has claims with the state of Maryland, so that $51 million may not be the end of the story,” von Ebers was quoted as saying in a media report last week before being terminated.

In late December, BCBSND sent a letter to state legislators announcing its intent to withdraw from the state’s expansion of Medicaid, another element of the federal ACA to be implemented by the states. The letter cited financial risk as the reason for the move.

“BCBSND is unable to assume the financial risk in the arrangement and is obligated to protect the company and its members from the unidentified claims costs for this population,” the letter read.

With BCBSND controlling more than 85 percent of North Dakota’s insurance marketplace, what impact these losses may have on premium increases is unclear. The company has said in previous media reports its financial reserves are at a “safe” level and above regulatory requirements.

The company has also said it doesn’t expect insurance premiums to increase; North Dakota law allows only for premium increases based on medical claims and administrative costs.

Insurance Commissioner Adam Hamm has said that his office is studying the company’s financial reports and won’t have a comment until the review is completed.

You can reach Rob Port at rport@watchdog.org