Louisiana Health Cooperative Inc., a nonprofit health insurer created with a $65.8 million federal loan under the health care law is winding down its operations at the end of the year and will not offer coverage in 2016.

The co-op said it will honor policies for the nearly 17,000 people who currently receive health insurance through the organization.

“LAHC has sustained itself over the last few years, but is not growing enough to maintain a healthy future. By proactively and voluntarily addressing our situation now, LAHC will be in a position to maintain all of its policies in force through the end of the year, and to cover all outstanding claims and operating expenses,” Greg Cromer, LAHC’s CEO, said in a statement Friday. “We are committed to all of those impacted by this decision, and we have capital allocated to fulfill all financial obligations through and following the end of the year, including staffing, provider funds and our other obligations.”

Because the closure is voluntary and fully funded, the co-op said it should have minimal impact to members and providers. “There will be no lapse in coverage for members; all providers will be compensated as owed,” Cromer said.

The co-op was one of six firms offering coverage in Louisiana through the federal online marketplace created by the Affordable Care Act, commonly known as “Obamacare.”

State Insurance Commissioner Jim Donelon said he’s confident the state’s health care market can absorb the co-op’s book of business for 2016 coverage. Blue Cross and Blue Shield of Louisiana has more than 125,000 people covered under six plans. Aetna Health Inc. has about 7,500 customers. Humana Health Benefit Plan of Louisiana Inc. has more than 6,800 people. Vantage Health Plan has about 7,500 members. UnitedHealthcare Life Insurance Co. has about 1,300 people.

The Louisiana co-op was one of 23 companies created nationally by the Affordable Care Act and $2 billion in total loans. The Consumer Operated and Oriented Plans, or CO-OPs, were designed to ensure competition and offer affordable and innovative alternatives to the coverage offered by private insurance companies.

But enrollment in the Louisiana co-op fell short of expectations. In 2014, its first year in business, the co-op signed up 7,773 members but expected to enroll 28,106. This year, the co-op’s two plans signed up just shy of 14,500 members.

Donelon said the co-ops have struggled since they were formed. Donelon cited an A.M. Best report from January that found only one co-op, Maine Community Health Options, had favorable underwriting and net income.

“They were created with the best of intentions to offer more competition and more options,” Donelon said. More competition was needed because in many states, Donelon said, Blue Cross and Blue Shield affiliates have a monopoly on market share. But it was a struggle to launch a startup insurance firm in the uncertain post-Affordable Care Act health care environment.

Donelon said representatives from his office are on-site at the co-op’s Metairie headquarters.

“We will continue to closely review the financial status of the company in order to work to ensure that the co-op has the financial ability to pay all claims,” he said. “We do not want anyone, whether a policyholder or a doctor or hospital or pharmacist that has claims, to be left unpaid.”

The insurance department is examining the issues that led the co-op to shut down, but the primary concern is to make sure policyholders are treated fairly and informed of their coverage options for 2016.

Editor’s note: This story was changed July 27, 2015, to include Vantage Health Plan on the list of companies offering insurance in Louisiana through the federal marketplace created under the Affordable Care Act.