Managers of Kentucky Health Cooperative Inc., a nonprofit, member-owned health insurer based in Louisville, say the company will shut down at the end of the year.
Organizers used $146 million in loans from the Consumer Operated and Oriented Plan (CO-OP) program, a Patient Protection and Affordable Care Act (PPACA) program, to start the insurer.
The U.S. Department of Health and Human Services (HHS) announced last week that another new PPACA program, the risk corridors program, may be able to provide less than 13 percent of the payments the program was supposed to send health insurers for 2014.
PPACA calls for the risk corridors program to use cash from PPACA exchange plan issuers that do well in 2014, 2015 and 2016 to help exchange plan issuers that do poorly during those years.
The risk corridors program shortfall means the Kentucky CO-OP may get just $9.7 million of the $77 million in risk corridors payments it was hoping to collect, according to Glenn Jennings, the company’s chief executive officer.
Jennings said in a statement that the risk corridors announcement forced the board to start the process of shutting the company down.
“In plainest language, things have come up short of where they need to be,” Jennings said.