Kentucky.com
Kentucky Health Cooperative going out of business; 51,000 insurance customers affected
By Jack Brammer
October 9, 2015
FRANKFORT — The largest private provider
of health insurance policies on Kynect, Kentucky's health insurance exchange, is
going out of business.
The Louisville-based Kentucky Health Cooperative Inc. announced Friday that
it will end current memberships on Dec. 31 and will not add new members because
of financial problems. It will not offer health insurance plans on Kynect when
open enrollment for 2016 coverage starts on Nov. 1.
The cooperative has about 51,000 members in all 120 Kentucky counties.
Shortly after the company's announcement, Gov. Steve Beshear said Kentuckians
in need of health care coverage can find other choices and possibly lower prices
by shopping on Kynect during the 2016 open enrollment period. It begins Nov. 1
and runs through Jan. 31.
Policyholders with Kentucky Health Cooperative will continue to be covered
under their existing policies, most of which expire Dec. 31, 2015, Beshear said.
Customers with questions about their current coverage can contact the
cooperative or the Kentucky Department of Insurance at 1-800-595-6053.
Beshear said seven companies will offer insurance plans to individuals and
families on Kynect during the enrollment period. That is up from three in 2014
and five this year.
"This is the largest number of carriers in the individual market in Kentucky
since the late 1990s," he said.
Jonathan Gold, press secretary for the U.S. Department of Health and Human
Services, said in an email that the federal government is "working with Kentucky
officials to do everything possible to make sure consumers stay covered."
As of June 30, 88,904 people in Kentucky were enrolled in private health care
plans through Kynect. Almost 70 percent of them received a tax credit to help
offset their insurance premium.
U.S. Senate Majority Leader Mitch McConnell, who opposes the federal health
insurance law that allowed Beshear to create Kynect, said the shutdown of
Kentucky Health Cooperative is the latest example of the law's failures.
"Barely a week goes by that we don't see another harmful consequence of this
poorly conceived, badly executed law," McConnell said in a statement. "Despite
repeated Obama administration bailout attempts, this is the latest in a string
of broken promises with real consequences for the people of Kentucky who may now
be losing the health insurance they had and liked twice within the past three
years because of Obamacare's failures."
Republican gubernatorial nominee Matt Bevin echoed McConnell, calling the
federal health law "a disaster for Kentucky taxpayers" and criticizing his
Democratic opponent, state Attorney General Jack Conway, for not doing more to
protect consumers.
"Where has Jack Conway been in investigating this catastrophic co-op?," Bevin
said. "Once again, Jack is playing political games instead of doing his
job."
Conway said "the private sector and market forces" will determine the success
or failure of individual insurance companies, "but my commitment is that every
Kentuckian who wants health care will have access to it — because it's vital to
Kentucky's continued economic success and the prosperity of our residents."
Glenn Jennings, the interim chief executive officer of Kentucky Health
Cooperative, said the decision to shut down was a result of not receiving
adequate federal funding "on which the organization had relied."
The co-op, financed by loans under the reform law, lost $50 million last year
after selling 75 percent of the private insurance policies purchased on Kynect
in its first year. That was far more than the 30,000 customers it was projected
to lure.
Many of those members did not previously have health insurance, which led to
"a lot of people with pent up medical needs," Jennings said. "When they suddenly
had health insurance ... they began using their benefits."
Jennings said the co-op had reversed a trend of significant financial losses,
but needed further support under a temporary program meant to keep prices lower
by sharing losses between insurance plans and the federal government.
The company's losses had slowed to $4 million by the end of the first half of
2015, he said.
"We were on track to reverse direction and begin operating in the black, and
we expected this to come about in 2016," Jennings said.
But the federal government announced last week that it would provide just
12.6 percent of the money requested by insurance providers through the
assistance program.
Kentucky had hoped to get $77 million but got $9.7 million, he said.
The co-op will continue to meet its financial obligations through the end of
the year, Jennings said.
The cooperative said it is working with the Kentucky Department of Insurance
and the Centers for Medicare and Medicaid Services to help ensure "a smooth
transition."
All health plans sold on Kynect will be available to preview Oct. 16 at Kynect.ky.gov or by calling 1-855-459-6328,
Beshear said.
"We encourage people who are currently uninsured and those who previously
purchased a plan on Kynect to come back and shop again during open enrollment,
because they may find a better plan for their family," he said.
Beshear noted that the
U.S. Census Bureau reported last month that Kentucky's uninsured rate had
declined to 8.5 percent, the biggest drop in the country from 2013 to
2014.
Depending on where an individual lives, Kynect enrollees could choose from as
many as seven insurance companies during open enrollment that offer 86 private
health insurance plans.
The insurance carriers for 2016 are Aetna, Anthem, Baptist Health,
CareSource, Humana, United Healthcare and WellCare. Two insurers, Anthem and
United Healthcare of Kentucky, will offer plans to residents in all 120
counties.
Many Kentuckians will qualify for special discounts and subsidies, which are
only available for plans purchased through Kynect, Beshear said.
He said individuals can determine if they qualify for special discounts or a
subsidy by visiting the Kynect website and using the pre-screening tools.
Those who do not obtain health insurance, which is required under the federal
law, could face a tax penalty.