The Kentucky Health Cooperative, which has postponed entering the West Virginia health insurance marketplace since announcing its intention to offer plans in 2014, will dissolve by Dec. 31, forcing more than 50,000 Kentuckians to seek health coverage elsewhere.
"We were cautiously optimistic that once they expressed interest in coming to West Virginia, they'd make it here at some point," said West Virginia Insurance Commissioner Mike Riley. "However, they had not filed any rates, so we have no exposure to their operations."
The Kentucky Health Cooperative first announced its plans to enter the market in West Virginia in May of 2014 but backtracked in November, when its chairman told the Charleston Gazette that the it was postponing its entry amid infrastructure concerns, noting that the co-op had seen twice the enrollment it had anticipated in its first year.
Health insurance cooperatives, unlike private health insurance companies, are owned by the people they insure. Co-ops like the Kentucky Health Cooperative are not government-run and are designed to provide an alternative to state-provided and single-payer insurance coverage. The Kentucky co-op is the largest private provider of policies on Kynect, Kentucky's state-based insurance exchange. Highmark West Virginia, the state's largest insurer, and CareSource, an Ohio-based health maintenance organization, are the only two carriers offering marketplace plans for individual plan holders in West Virginia.
Thomas Bias, a research instructor at the West Virginia University School of Public Health, said the closure of Kentucky's cooperative was unsurprising - several cooperatives established to meet the demand created by the Patient Protection and Affordable Care Act have since folded.
"The co-ops have been folding up around the country; several states have tried it, and I think Kentucky was one of the last ones left," Bias said. "I think there's a combination of reasons, one of which was that they could offer better benefits than more traditional plans, but they came at a higher cost. What we've seen in the marketplace, and in insurance in general, is that people will largely make decisions based on the premiums they're going to have to pay."
Unlike Kentucky, West Virginia did not establish its own cooperative or its own state-based exchange, opting instead to create a partnership exchange operated by the federal government. Only a small portion of the state's population - estimated to be less than 100,000 - is eligible for plans on the individual marketplace, and the rural nature of West Virginia combined with its poor health outcomes makes it a difficult sell for new carriers on the marketplace, Riley said.
"Given our small population and the small number of folks who would go through the process, it was just too costly to be feasible," Riley said. "A lot of other states are running into those issues in operating their state exchanges."
Bias said the greatest shift in West Virginia's insurance rates has been in its Medicaid population, which has gained more than 165,000 new enrollees since 2014. More than half the state's population is covered by Medicaid or Medicare, and much of the rest by PEIA and other workplace-based coverage.
"It's good that we're going to see two companies, but in the small marketplace, that could be the norm," he said. "I think the reason that West Virginia opted for the partnership exchange early on is that the state doesn't have to worry about getting the sustainability up to par or worry about having its own IT costs or call center. It's really IT costs that are expensive - you're concerned about coverage for thousands of people, but also about millions of dollars for this information technology infrastructure that made the state-based marketplace an unsustainable idea to begin with."
Reach Lydia Nuzum at lydia.nuzum@wvgazettemail.com, 304-348-5189 or follow @LydiaNuzum on Twitter.