Faced with financial difficulties, Kentucky Health Cooperative Inc. has become the latest state-based consumer operated and oriented health plan (CO-OP) to fail, as the health plan announced it will discontinue selling policies at the end of the year.
Policyholders will continue to be covered until Dec. 31, when members will need to choose a new plan for the 2016 open enrollment period, which begins Nov. 1, according to a statement from the CO-OP. The non-profit health insurance company was the largest private provider on Kynect, the state's health insurance exchange, serving 51,000 consumers throughout Kentucky.
The CO-OP's decision to close came after it faced considerable financial struggles and then learned it would not receive federal risk corridor funding on which the organization had relied, according to the statement. "In plainest language, things have come up short of where they need to be," said Kentucky Health Cooperative interim CEO Glenn Jennings.
The federal government recently announced that it will be able to pay only 12.6 percent of what it owes insurers through the risk corridor program, which collects funds from insurers that are more successful on the exchanges and distributes those payments to less successful insurers to lessen the financial risk associated with operating on the exchanges.
Kentucky Governor Steve Beshear said seven companies will offer insurance plans to consumers in need of healthcare coverage on Kynect in 2016, up from five this year, according to a report on Kentucky.com. But Senate Majority Leader Mitch McConnell (R-Ky.), who opposes the Affordable Care Act, told the news outlet that the CO-OP's closure is the "latest in a string of broken promises" from the Obama administration that will hurt Kentucky residents.
Kentucky Health Cooperative is among several CO-OPs to go out of business. Health Republic Insurance of New York announced in late September it would discontinue selling policies at the end of this year. CO-OPs in Lousiana, Tennessee, Iowa and Nevada have also struggled or failed.