LOUISVILLE, Kentucky — A Kentucky nonprofit that emerged as one of the largest insurance providers on the state's health exchange has given notice that it won't offer plans for 2016, a decision affecting tens of thousands of customers ahead of the next enrollment period starting in a few weeks.
The decision by Kentucky Health Cooperative, which operates in all 120 Kentucky counties, set off another round of political bickering over the federal health care overhaul and its impact on the state as Kentuckians prepare to elect a new governor on Nov. 3.
State health officials said Friday that current policyholders with Kentucky Health Cooperative will continue being covered through their existing policies, most of which expire Dec. 31, 2015. The company currently serves about 51,000 members.
But the cooperative notified state health officials that it will not offer plans when the 2016 open enrollment period begins Nov. 1 to purchase private health plans on kynect, the state's health exchange. The enrollment period runs through next Jan. 31.
Kentucky Health Cooperative's interim CEO, Glenn Jennings, said the nonprofit "came up short" of where it needed to be.
The company had received federal loans to help it stay afloat. Jennings said the decision to stop offering plans resulted from the company not receiving federal funding on which it had relied. The cooperative's losses reached about $50 million in 2014 but had been whittled to $4 million by 2015, it 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.
Last year, Kentucky Health Cooperative received a $65 million federal loan from the Centers for Medicare and Medicaid Services to keep it afloat just days before the open enrollment period began. It is not unusual for nonprofit co-ops to receive so-called "solvency loans" from the federal government.
Responding to the Kentucky development, CMS said it recognized that not all startup co-ops would succeed.
"CMS' priority is to make sure that marketplace customers have access to quality, affordable coverage through the marketplace," the U.S. Department of Health and Human Services said Friday. "We are working with Kentucky officials to do everything possible to make sure consumers stay covered."
Gov. Steve Beshear's administration pointed to federal Census data showing Kentucky led the nation in the biggest drop in the number of people without health insurance from 2013 to 2014. Beshear is a staunch proponent of the Affordable Care Act. The law's opponents refer to it as "Obamacare." Beshear cannot seek re-election because of term limits.
The number of companies selling policies in the individual market on the exchange continues to grow, despite the loss of Kentucky Health Cooperative, state health officials said. Seven companies will sell such policies in the 2016 enrollment period, up from five in 2015 and three in 2014, they said.
Beshear predicted all Kentuckians will have at least two options of insurance companies in their counties for the 2016 enrollment.
The co-op's departure from the exchange, and the impact for its 51,000 members, drew an immediate response from top Kentucky Republicans.
"This financial debacle is a direct result of 'Obamacare,' which Gov. Beshear was too quick to embrace," said Republican gubernatorial candidate and Louisville businessman Matt Bevin.
U.S. Senate Majority Leader Mitch McConnell, R-Ky., called it "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."
Bevin said his Democratic opponent, state Attorney General Jack Conway, had failed to protect the co-op's members.
"Where has Jack Conway been in investigating this catastrophic co-op?" Bevin said.
Conway countered that Bevin has vowed to repeal Kentucky's expanded Medicaid program under the federal Affordable Care Act, a decision by Beshear that brought health insurance to more than 400,000 people across the state.
As for the co-op's departure from the exchange, Conway said: "The private sector and market forces will ultimately determine which of the providers are most successful, 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."