The federal Center for Consumer Information and Insurance Oversight (CCIIO) has provided about $638 million in loans for seven organizations that are trying to set up a new type of nonprofit, member-owned health plan -- a Consumer Operated and Oriented Plan (CO-OP).
One of the best-known CO-OP organizers has been John Morrison, a former Montana insurance commissioner who has helped start the Montana Health Cooperative. Montana Health Cooperative received a $58 million award.
The biggest award winner overall has been Freelancers Union, Brooklyn, N.Y.
Freelancers Union, an organization that runs high-profile health insurance programs for self-insured people, has won a total of $340 million in CO-OP startup loans. Freelancers Union says it will use the loans to start CO-OP programs in New Jersey, New York and Oregon.
Midwest Members Health has received $113 million to start a CO-OP plan that would operate in Iowa and Nebraska, and Commonground has received $56 million to start a plan that would operate in Wisconsin.
CCIIO officials have not given a count of the number of applications received so far or said whether it has rejected any. Officials note that they are still reviewing some of the applications received in October 2011 and may end up providing loans for more first-round submitters.
The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the CO-OP program in an effort to increase the level of competition in the health insurance market. PPACA Section 1322 calls for the plans to sell coverage through the new PPACA health insurance exchange system and get "substantially all" of its business from individuals and small groups.
A CO-OP plan could operate in a whole state or in part of a state, or in multiple states. A CO-OP would be licensed as an insurer in each state in which it operates.
Although a CO-OP plan would offer coverage
through the exchange system, it also could sell coverage outside of an exchange, according to officials at CCIIO, the arm of the U.S. Department of Health and Human Services (HHS) responsible for implementing PPACA Section 1322 and many other PPACA provisions.
Program rules forbid for-profit health insurers from creating CO-OP plans or participating in CO-OP
CCIIO set the first deadline for CO-OP loan applications for Oct. 17, 2011, and the second for Jan. 3, 2012. The next application deadline is Dec. 31, 2012.
Congress has allocated a total of $3.8 billion in CO-OP loan funding, and CCIIO officials are hoping entities to start CO-OP programs that will serve each state and the District of Columbia.
CO-OP program critics have questioned whether the CO-OP plans will have much effect on the health insurance industry, noting that existing cooperative health plans tend to resemble other types of nonprofit health plans, and that the United States already is home to many nonprofit health plans of all sizes, including a number that are owned by hospitals and other provider-run
health care systems.