Last year, Ohio doctors who were fed up with health insurance companies started The Physicians Assurance Corporation (TPAC). Designed to serve the employer-provided health insurance market, it featured low premiums, aggressive disease
That wasn’t enough to ensure success. TPAC lasted less than 10 months.
The Ohio Department of Insurance requires health insurers to maintain at least $2.5 million in reserve accounts. When TPAC’s reserves fell below $500,000, the department forced it into liquidation and it closed its doors.
The move leaves 350 small and midsize Ohio employers without insurance.
Many of the firm’s investors were participating physicians, and much of the $5.6 million the company lost during its short life came right out of their pockets.
Some analysts blamed the fiscal crunch on the higher-than-average reimbursements TPAC paid to doctors. But others questioned why the company never availed itself of reinsurance contracts it had in place, which could have bolstered its financial position.
Many large insurers viewed the company’s low premiums with skepticism. They’re not surprised the company folded.
The state will pay remaining claims up to $100,000, with larger claims going before the Ohio Insurance Liquidator, which has agreed to hire 30 TPAC employees to help wind down the insurer’s business.
Final note: Thinking about switching insurance carriers? Do your due diligence by checking the new carrier’s soundness with the Ohio Department of Insurance (www.ohioinsurance.gov).
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