Two more Obamacare co-ops fail: Tennessee and Kentucky both announce closures


Approximately 27,000 Tennesseans who had coverage through the Tennessee Community Health Alliance will be receiving cancelation notices soon. Just yesterday, the CHA announced that it had entered a voluntary state-approved runoff and will no longer offer insurance plans in 2016. This decision comes just weeks away from the next Obamacare Open Enrollment period beginning on November 1, 2015. Policyholders who continue to pay their premiums will keep their coverage through December 31, 2015, but will be forced to choose a new plan from the four remaining carriers participating in the state’s Exchange.

“This was not a decision that the Department took lightly, but it was the right decision,” TDCI Commissioner Julie Mix McPeak said. “With thousands of Tennesseans’ coverage hanging in the balance, CHA’s financial success could not be guaranteed. Ultimately, the risk of CHA’s potential failure in 2016 was too great and would have caused substantial detrimental effects on the market as a whole if it were to collapse.”

This latest announcement from Tennessee comes just days after Kentucky Health Cooperative Inc., the largest insurance provider on Kynect, the state’s ObamaCare exchange, announced it too is going out of business.

According to The Lexington Herald-Leader, Kentucky Health Cooperative has about 51,000 members in all 120 Kentucky counties – about 75 percent of those insured on Kynect – all of whom will have to find new insurance in 2016.

The co-op lost $50 million last year, partly because over 20,000 more people had purchased the insurance than originally estimated. Glenn Jennings, Kentucky Health Cooperative’s interim CEO, told the Herald-Leader that further financial woes came because many of their new members had not previously had health insurance, leading to “a lot of people with pent up medical needs.” Then, said Jennings, “when they suddenly had health insurance…they began using their benefits.”

Jennings said that they had slowed their losses to $4 million in the first half of 2015, but were counting on substantial federal loans to continue operations. Instead, the feds announced they would only provide 12.6 percent of the funds requested by insurers through the assistance program. Kentucky’s insurers were hoping to get a total of $77 million in loans, but only received $9.7 million.

Only 17 of the original 23 co-ops are still providing coverage, despite the federal government doling out a reported $2.4 billion in loans through an assistance program designed to help start Obamacare insurance cooperatives around the country. As of December 2014, 21 of the 23 were still losing money.

The 78,000+ enrollees in these two states who are now being notified that they’re losing their plans will likely find little comfort in the words of former HHS Secretary Sebelius, who recently claimed Obamacare keeps people from being “locked out, priced out, or dumped out,” of their plans.  For these folks, their cancelation notices say otherwise.


Kristina Ribali is the Senior Coalitions Director for the Foundation for Government Accountability.  Follow Kristina on Twitter for the latest on Obamacare or contact her via email at [email protected]

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