Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Government
December 23, 2014 12:00 AM

Co-op insurers receive additional federal loan dollars to boost solvency

Paul Demko
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The CMS has awarded more than $300 million in “solvency funding” in recent months to a half-dozen not-for-profit insurers that were established under the Patient Protection and Affordable Care Act.

    That includes roughly $130 million to consumer-governed health plans that dominated the marketplaces in Kentucky and Maine during the first open-enrollment period. The other beneficiaries were co-op plans operating in New York ($90.7 million), Wisconsin ($51.2 million), Connecticut ($48.4 million) and Iowa and Nebraska ($32.7 million).

    The 23 startup insurers have received a total of roughly $2.5 billion in loans under the federal healthcare law. Almost all the loans are supposed to be paid back over 15 years. According to multiple co-op officials, they've been told that this was the last round of available funding from the federal government.

    The not-for-profit plans were included in the ACA in part to placate liberals who were upset that no public-option plan was part of the legislation. Republicans have blasted the startup insurers as a wasteful government intervention in the marketplace.

    The co-op plans are required by the CMS to maintain at least 500% of risk-based capital. That's the minimum amount an insurer needs to supports its business operations.

    Kentucky Health Cooperative captured nearly 80% of private plan customers during the first year of exchange operations. Similarly, 83% of shoppers in Maine opted for a plan from Maine Community Health Options. They each received roughly $65 million in solvency funding.

    Maine's co-op expanded into New Hampshire this year. Kentucky Health Cooperative initially planned to expand into West Virginia, but pulled out of that market just before the start of the open-enrollment period. The insurer still plans to compete in West Virginia for 2016 customers.

    Senate Majority Leader Mitch McConnell, who represents Kentucky, blasted the latest loan to the Kentucky insurer, which wasn't made public until last week. "If Obamacare were really such a success story in Kentucky, why did this co-op need a taxpayer bailout?" McConnell asked, according to the Associated Press, which first reported the loan. "Even more disconcerting, why was that bailout kept a secret from the very people who were about to enroll in it?"

    But Janie Miller, CEO of Kentucky Health Cooperative, indicated that the need for additional dollars is normal for a startup insurer in an uncertain environment. “First-year enrollment was almost double the amount anticipated resulting in the need for additional solvency funding,” Miller said in a statement. “The co-op program was built understanding that it would take two or three years before a co-op would be in a position to get to a steady state and begin to achieve the financial operating results/performance that would allow them to start repaying the federal loans.”

    Kevin Lewis, CEO of Maine Community Health Options, also noted that enrollments were more than twice as high as anticipated and that the need for additional capital shouldn't be seen as any kind of sign that the fledgling insurer is in financial trouble. “As new entrants to the market without a broad base to absorb any kind of crazy year they just want to make sure there's plenty of reserves,” Lewis said. “Over time, we're going to be replacing those loans with our own reserves.”

    HealthyCT received $48.4 million in solvency funding in September. Unlike co-ops in Maine and Kentucky, the startup insurer captured only 3% of market share on Connecticut's exchange during the first open-enrollment period, said Ken Lalime, the co-op's CEO. In response, the fledgling insurer dropped premiums by an average of 8% for 2015. So far during the current open-enrollment period, 20% of exchange customers are choosing one of HealthyCT's plans.

    “We all want to have additional members. That obviously brings in additional dollars,” Lalime said. “It's this balance of member growth and solvency that makes organizations continue to thrive.”

    Follow Paul Demko on Twitter: @MHpdemko

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    mh_20160711p29_bills_i.jpg
    State, local governments pay off medical debt relief with COVID funds
    HHS AGENCY
    Congress told HHS to create a data management system in 2006. It never did.
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing