Kentucky Health Cooperative, largest private provider on state insurance exchange, gets $65 million loan to keep going

The Kentucky Health Cooperative, a non-profit, consumer-governed health insurance company, received a $65 million federal loan last month to keep it afloat just days before the second open-enrollment period began, reports Adam Beam of The Associated Press.


The cooperative received the loan from the Centers for Medicare & Medicaid Services on Nov. 10, five days before Kentuckians resumed purchasing private health plans on Kynect, the state health-insurance exchange.

Republican U.S. Sen. Mitch McConnell claimed the loan "raises serious questions" about federal health reform in Kentucky, Beam reports. "If Obamacare were really such a success story in Kentucky, why did this co-op need a taxpayer bailout?" asked McConnell, the incoming Senate majority leader. "Even more disconcerting, why was that bailout kept a secret from the very people who were about to enroll in it?"
CMS officials told Beam they waited until all the loans to state-based health cooperatives had been awarded before announcing them. These loans are competitive and must be applied for. The officials said it is not uncommon for nonprofit co-ops to receive "solvency loans" from the federal government because these new insurers need help meeting their cash requirements.

"To date, co-ops in seven other states have received more than $355 million in additional solvency loans, according to the CMS website. Co-ops have 15 years to repay the loans, with interest, to the federal government," Beam writes.
The first federal loans for the Kentucky Health Cooperative were based on how many customers it expected to have. The co-op predicted it would have about 30,000 customers, but has 57,000, Janie Miller, its chief executive officer, told Beam: "Therefore we needed additional capital sitting there from which we would, of course, pay claims."

The Kentucky Health Cooperative sold three-fourths of the qualified health plans sold on the exchange in the first round of enrollment.

Since enrollment reopened Nov. 15, more than 9,200 people have used it to purchase a private health insurance plan. Of those, more than 6,000 qualified for a federal discount on their premiums. Another 75,700 people have renewed the private health insurance they purchased last year.

The Kentucky Health Cooperative received a federal loan to expand into West Virginia this year, but concerns about its infrastructure not being ready to handle the demands of the state has since delayed the launch for one year, until Jan. 1, 2016, Lydia Nuzum reports for The Charleston Gazette.

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