As Large Health Insurer Shutters, Kentucky Tries to Allay Fears

by | October 13, 2015

By Jack Brammer

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.

(c)2015 the Lexington Herald-Leader (Lexington, Ky.)