Kentucky Health Cooperative
Kentucky Health Cooperative, Inc., the nonprofit health insurance company serving all 120 Kentucky counties, will not offer health insurance plans on Kentucky's health insurance Marketplace, or Exchange, when Open Enrollment for 2016 coverage starts on November 1.
"It is with sadness that we announce this decision," said Kentucky Health Cooperative interim CEO Glenn Jennings. "This very difficult choice was made after much deliberation. If there were a way to avoid it and simultaneously do right by the members, providers and all others that we serve, we would do so.
"In plainest language, things have come up short of where they need to be," Jennings added.
The decision was reached as a result of not having received federal risk corridor funding on which the organization had relied, Jennings explained.
Kentucky Health Cooperative, also known as "the CO-OP," has sustained itself for almost two full years of operation and has effectively reversed a significant financial loss trend. In 2014, the CO-OP's losses tallied around $50 million. By the end of the first half of 2015, losses had been slowed to $4 million.
"We were on track to reverse direction and begin operating in the black, and we expected this to come about in 2016," Jennings said.
Last week's announcement of a risk corridor reimbursement to the nation's CO-OPs of just 12.6% (or, for Kentucky, a payment of $9.7 million, from a starting number of $77 million), led to an unavoidable outcome, Jennings said. He emphasized that Kentucky Health Cooperative is continuing to meet its financial obligations.
Kentucky Health Cooperative has never struggled to meet membership projections that were initially set at around 30,000. Enrollment spiked to over 57,000 last year. Presently, the company is serving about 51,000 members. Current memberships will end on December 31, 2015. New memberships will not be added.
Two years ago, the organization was busy spreading the word about the Affordable Care Act, the concept of health insurance cooperatives, and Kentucky Health Cooperative.
"No one really knew how consumers would take to the CO-OP," Jennings said. "Introduction to the concept of a member-governed nonprofit organization that exists for the benefit of its members, not to make money for shareholders, was required. Additionally, because the CO-OP is truly statewide, for many Kentuckians, especially those living in rural counties, there was a choice of at least two health plan providers. This worked in our favor."
By the end of the first Enrollment Period, about 75% of the commercial market buying coverage through the marketplace, called kynect, in Kentucky – had selected a Kentucky Health Cooperative plan.
"Many of our members had never had health insurance before January 1, 2014," Jennings observed. "What happens when people don't have health insurance? They probably aren't looking after their health and well-being. They're probably not seeing providers. If they aren't seeing providers, they might not be aware that they have chronic conditions. Or, they might be dealing with something that's acute, but they didn't have the out-of-pocket funds to get treatment. All this adds up to a lot of people with pent-up medical needs. When they suddenly had health insurance – and again, with many of them having selected a CO-OP plan – they began using their benefits. When benefits are used, claims must be paid. Kentucky Health Cooperative has paid millions of dollars in claims on the behalf of our members."
The CO-OP has delivered on its mission, said Joseph E. Smith, president of the Board of Directors.
"Kentucky Health Cooperative has promoted community health and well-being by engaging its members and providers. We have delivered quality coverage of integrated healthcare services to tens of thousands of Kentuckians. We have kept the financial and health well-being of our members at the forefront," Smith said.
The CO-OP is focused on paying its members, providers, vendors, agents and employees. In partnership with the Kentucky Health Benefit Exchange, the CO-OP is reaching out to its members regarding health insurance options for the upcoming Open Enrollment, which runs November 1, 2015 through January 31, 2016. It is also working with the Kentucky Department of Insurance and the Centers for Medicare & Medicaid Services to help ensure a smooth transition.