Julia Nazarenko sat outside the Heine Brothers' Coffee on Eastern Parkway, sipping coffee and peering into her laptop screen. On a recent sunny weekday afternoon, she was trying to figure out if she still qualifies for Medicaid coverage.
She had been eligible since the federal Affordable Care Act launched last year. But her Medicaid coverage came through the nonprofit Kentucky Health Cooperative, which announced this month that it will close.
“Hopefully, I will qualify for Medicaid again,” she said.
Nazarenko isn't alone. There are about 51,000 people in Kentucky who are also insured under Kentucky Health Cooperative who will now have to find other options.
Open enrollment for 2016 begins Sunday.
The co-op and others like it across the U.S. found themselves in a difficult position: offering affordable options to consumers on one end, and not getting the federal support their leaders had anticipated on the other. The Kentucky Health Cooperative drew many high-risk consumers, leading to higher claims, said Carrie Banahan, executive director of Kentucky’s health insurance exchange, Kynect.
“They were really the lowest-cost option on Kynect in 2014," she said.
These smaller insurance providers can’t afford to stay in business for long if they’re operating at a loss, said Cynthia Cox, associate director of health reform and private insurance for the Kaiser Family Foundation.
“These co-ops or sort of start-up insurance companies, they don’t have a lot of capital to work with, so as an insurance company they’re less able to withstand losing a lot of money in one year,” Cox said.
Earlier this year, the Kentucky co-op requested its second straight rate increase of more than 20 percent. The co-op expected to receive $77 million from the federal government to cover financial losses from insuring higher-than-average usage among members. But the government awards loans to co-ops based on the ability to become financially viable, and it gave Kentucky Health Cooperative only about 12 percent of what the company expected.
Hence the shutdown.
Several other co-ops have or are planning to shutdown, in states ranging from Louisiana to New York to Utah. But people insured through providers that close should be able to switch to a comparable plan for about the same cost, Cox said.
“If you had one of the lowest-cost plans last year and you’re willing to switch into whatever the lower-cost plans are in 2016 then — assuming everything else in your family and income is the same — you’d probably pay about the same that you did in 2015,” Cox said.
Nazarenko is a waitress and part-time English teacher. Without Medicaid coverage, she couldn’t afford health insurance, she said.
At Heine Brothers', Nazarenko hit a wall while looking online for another insurance plan. She decides to call Kynect's help center. The rep tells Nazarenko she’ll be insured through the end of the year under her current plan, via Humana Caresource. She should be able to maintain her coverage through Medicaid in 2016, she is told.
The rep also tells her she will receive a letter in the mail when it's almost time to re-enroll. Nazarenko is relieved.
“Well, it’s good to hear that they’re going to let me know for sure when I need to reapply and that Medicaid at least isn’t affected," Nazarenko said.
Last week, the Kentucky Department of Insurance filed a petition to place Kentucky Health Cooperative into rehabilitation. This means the department will oversee daily operations of the health insurance company to protect providers and consumers like Nazarenko.
Kentuckians who'll be looking for new insurance on Kynect starting Sunday will need to select a new plan by Dec. 15 to secure a Jan. 1, 2016, effective date, Banahan said.
"There's going to be plenty of choices on Kynect," she said. "They might find more affordable options through Kynect, and I would just recommend that they just look at their options."