Kentucky’s health insurance co-operative joined the growing list of failed Obamacare co-operatives, announcing Wednesday it will cease operations by the end of the year.
Federal officials were so out of the loop about the failing state of the Kentucky Health co-operative last November they awarded it $20 million in additional “expansion funds” to allow it to sell health insurance to customers in nearby West Virginia.
The Department of Health and Human Services’ Centers for Medicare and Medicaid gave the non-profit startup $146 million in a low-interest loan in 2012 that was supposed to last for 15 years. It barely lasted two.
The Kentucky startup became the sixth federally-funded Obamacare non-profit to fail since the administration awarded $2.4 billion in loans to 23 co-ops in 2012.
It also comes on the heels of the collapse of the largest Obamacare co-op in the nation, Health Republic of New York. That co-op was awarded $355 million in federal loan funds.
When Health Republic defaulted, The Daily Caller reported that CMS officials warned that more co-op failures could occur this year.
Hints that trouble was brewing came in June when CEO Janie Miller unexpectedly announced she was stepping down. She said she was leaving for “personal reasons.”
Like many other co-op leaders, Miller was a partisan Democratic Party insider. She served in the administration of Kentucky’s Democratic Gov. Steve Beshear and from 2001 to 2003 she served as the state’s insurance commissioner.
“In plainest language, things have come up short of where they need to be,” said interim CEO Glenn Jennings in a statement.
About 56,000 Kentucky and West Virginia customers are now scrambling to find new insurance companies by Jan. 1.
The Kentucky co-op suffered huge financial losses in 2014. It reported $126 million in net losses, greater than the $124 million it reportedly had been originally given, according to the National Association of Insurance Commissioners.
Because of the capital shortfall, CMS officials last November also sent in an emergency tranche of $65 million in emergency solvency funds to the co-op.
The capital was sent to assure that the co-op had the minimum sufficient capital reserves as required by insurance regulators.
So far, Obamacare co-ops have failed in Vermont, Louisiana, Iowa, Nebraska, New York, Nevada and now Kentucky.
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