Feds launch health insurance co-ops with $639 million in low-interest loans

Feb 23 2012

Seven organizations received the funding, which is designed to advance the formation of health insurance co-operatives -- an alternative to the idea of a government-run public option and an entity to compete against private insurance plans.

Kaiser Health News: Feds Jump-Start Health Insurance Co-Ops With Loans
Seven organizations will receive a total of $639 million in federal low-interest loans to launch new, consumer-governed health insurance plans in eight states, the federal government announced Tuesday (Meyer, 2/21).

The Hill: Administration Announces First Reform Law Loans To Nonprofit Insurance Co-Ops
The Obama administration on Tuesday announced the first low-interest loans to nonprofit health insurance co-operatives funded under the healthcare reform law. The loan program was created as an alternative to the politically doomed government-run public option as a way to compete against private plans. Seven plans covering eight states have been awarded $640 million, part of the $6 billion the law sets aside in loans and grants (Pecquet, 2/21).

Politico Pro: Co-Ops In Eight States Win Start Up Funds
CCIIO Deputy Director Tim Hill said Tuesday the agency has awarded about $639 million in loans to health care reform's upstart consumer-oriented insurance cooperatives in eight states. The Freelancers Union, a 170,000-member organization based in New York City, sponsored three -; in New York, New Jersey and Oregon. Consumer Operated and Oriented Plans were also funded in Iowa, Montana, Nebraska, New Mexico and Wisconsin. The announcements, expected last month, were delayed due to "strong numbers" of applicants, CCIIO officials said. Many of them were not funded in the initial round, but are retooling their applications (Norman, 2/21).

The Associated Press/Washington Post: Obama Administration Loans $638M In Startup Money For Health Insurance Co-Ops In 8 States
Health care cooperatives that are being launched in eight states announced Tuesday they will receive a total of $638 million in loans from the Obama administration under the federal health insurance law. The administration said the new nonprofit health insurers will be run by their customers and will be designed to offer coverage to individuals and small businesses. Supporters say the co-ops will keep pressure on private insurance companies for both price and coverage (2/21).

Modern Healthcare: $639 Million In Loans For Insurance Co-Ops
The CMS has provided seven not-for-profit organizations a total of about $639 million in repayable loans to establish not-for-profit, consumer-governed health insurance companies, a type of plan that was created by the Patient Protection and Affordable Care Act. Funded through the 2010 law, the co-op plans are intended to be directed by customers and designed to give both individuals and small businesses more health insurance options (Zigmond, 2/21).

In related coverage, details regarding some of the organizations that will receive the loans -

The Associated Press/Des Moines Register: Loan Announced For New Iowa Nonprofit Health Insurer
The Obama administration is loaning $112.6 million to a health care cooperative that will serve Iowa and Nebraska, authorities said. The loans are part of the federal health insurance law... The Iowa provider is Midwest Members Health, which is sponsored by the Iowa Institute. The government said the new nonprofit health insurers will be run by their customers and will be designed to offer coverage to individuals and small businesses (2/21).

Bloomberg: Union For Independent Contractors To Offer Health Insurance
The Freelancers Union, a nonprofit created to represent freelance workers and independent contractors, will receive $341 million in loans from the U.S. government to start health insurance plans in three states. The plans will compete with for-profit offerings from companies including UnitedHealth Group Inc. (UNH) and WellPoint Inc. (WLP) and nonprofit Blue Cross plans beginning in 2014, Marilyn Tavenner, the acting administrator of the Centers for Medicare and Medicaid Services, said in a statement. The programs are called "co-op" plans, after a provision of the 2010 health law that authorized them (Wayne, 2/21).

Milwaukee Journal Sentinel: Federal Loans To Fund Nonprofit Health Insurer
Common Ground, a coalition of religious groups and other organizations, has been awarded two federal loans potentially totaling $56.4 million to start a nonprofit health insurer that would be run by its members. The money is part of $3.8 billion included in federal health care reform to help start nonprofit health insurers, similar to cooperatives, to compete in the market for individuals and small businesses. "We've got to try something new," said Robert Connolly, a small-business owner and president of the board of the Common Ground Healthcare Cooperative (Boulton, 2/21).