The largest provider of health insurance in Maine under the Affordable Care Act says it is finally on track to generate a surplus in 2017 after two consecutive years of crippling losses.

Still, Lewiston-based Community Health Options’ long-term future will depend heavily on the actions of Congress under the incoming Trump administration, which has vowed to repeal and replace the health care law.

A report issued Thursday by the Maine Bureau of Insurance shows that CHO’s financial losses in 2016 exceeded $43 million. As of Nov. 30, the insurance cooperative already had depleted a $43 million reserve it set aside at the end of 2015 to cover anticipated losses in 2016.

CHO attributed the higher-than-anticipated losses to reduced premium income resulting from having fewer customers than it expected. However, the report noted that paid customer claims were 7.3 percent lower than expected in November, the most recent month for which figures are available.

“As with other insurers, December results will have a significant impact on results for the entire year,” the report says. “The BOI is therefore closely following CHO’s operating results as it also works with the company to refine and finalize the 2017 plan.”

Community Health Options CEO Kevin Lewis said the co-op expects to generate a surplus this year because it has raised premiums significantly to bring them in line with actual costs.

“We have adequacy of capital. Our rates are sufficient,” Lewis said. “We don’t need a premium deficiency reserve for 2017.”

BIG LOSSES TO START

A year after becoming the only health insurance cooperative in the country to make money, CHO posted a $31 million loss in 2015 and was forced to set aside the $43 million in reserves to cover potential losses in 2016.

It also came under the close scrutiny of the Bureau of Insurance, which began requiring the co-op to submit monthly and quarterly financial reports. The reports are available on the bureau’s website.

To rein in losses for 2017, CHO raised individual premiums by an average of 25.5 percent, eliminated elective abortion and adult vision care coverage, and increased deductibles by as much as 470 percent for out-of-network care. Increases in federal tax breaks will offset the bulk of premium increases for most policyholders.

In addition, CHO pulled out of New Hampshire and is now focusing solely on Maine. Enrollment in CHO is down significantly from its peak of about 85,000. Lewis said it is still above 50,000 – the number of customers it had originally targeted for 2018.

New enrollment in CHO has been relatively anemic during the current open enrollment period, which ends Jan. 30. Lewis said the co-op has signed up 3,000 to 4,000 new customers, compared with about 12,000 new customers a year ago. However, the decrease in new sign-ups was expected, he said.

“We had to increase our rates, so we knew we wouldn’t be the lowest price out there,” Lewis said.

All three of Maine’s remaining ACA marketplace insurance providers – CHO, Anthem and Harvard Pilgrim Health Care – raised their premiums and made changes to their individual and small-group insurance plans for 2017, but CHO had the biggest percent increase for individual plans.

POLITICAL UNCERTAINTY

Despite two straight years of losses, Lewis and CHO spokesman Michael Gendreau said the co-op is actually in a much better financial position now.

“We have sufficient capital and enough surplus to meet our obligations in 2017,” Gendreau said. “We’ll be able to build on the surplus that we have.”

But he acknowledged that the current political climate has created a great deal of uncertainty for CHO’s customers. President-elect Donald Trump has vowed make repealing and replacing the Affordable Care Act his top priority, and the Senate and House already have taken action to start the ball rolling through a process known as reconciliation.

“I think we’ve all heard that there’s going to be some replacement to the Affordable Care Act,” Gendreau said. “I think the million-dollar question is, ‘What is that replacement going to look like?’”

Lewis said CHO will have the ability to adjust to whatever new health insurance system the incoming administration puts in place. However, until specific details about that new system are made available, the co-op will maintain its current course.

“We, along with other insurers, are making plans based on what’s known,” he said. “We have to know what the replacement framework is in order to respond effectively, so that’s something we’re paying close attention to.”

Gendreau said it is consumers, not CHO, who face the biggest threat from the ACA’s repeal.

The greatest potential harm to customers would be elimination of the tax credit that subsidizes monthly premiums for about 85 percent of policyholders, he said, adding that the tax credit can reduce a monthly premium of $350 to as little as $50. Without it, public access to health care would be significantly reduced.

“If that tax credit goes away, it’s now $350 again,” Gendreau said.

UNINSURED DOWN

According to a U.S. Department of Health & Human Services report issued in December, the rate of uninsured residents in Maine has fallen by 17 percent since the ACA was enacted in 2010, which equates to roughly 22,000 Mainers gaining coverage. About 40,000 more Maine residents could gain coverage if the state passed Medicaid expansion, it said.

In addition to coverage for residents who otherwise would be uninsured, hundreds of thousands of Mainers with employer, Medicaid, individual market or Medicare coverage also benefited from new protections as a result of the law, the report said. Those include the elimination of annual and lifetime coverage limits, along with free preventive care such as flu shots and cancer screenings.

Before the ACA was passed, 431,000 Mainers with employer or individual market coverage had a lifetime limit on their insurance policy, it said.

The report also noted that about 8,000 young adults in Maine have benefited from the ACA provision that allows kids to stay on their parents’ health insurance up to age 26.

Gendreau said he expects to see a lot more discussion about the pros and cons of whatever replacement plan the Republican-controlled Congress has in mind before any change is approved.

“Whatever they pass, they’re going to have to own it,” he said.

Correction: This story was updated on the morning of Jan. 14 to correct an inaccurate headline and to clarify statements from Kevin Lewis. CHO did not say the expected surplus is dependent on Congress. Kevin Lewis was referring to a specific type of reserve (premium deficiency) when he said CHO does not need a reserve for 2017, and he was referring to 2018 targets when he said enrollment is still above 50,000.