New Private Nonprofit Health Plans Will Increase Competition, Give Consumers and Small Businesses More Health Insurance Choices

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Recently, the Centers for Medicare and Medicaid Services (CMS) took steps to encourage the creation of Consumer Operated and Oriented Plans (CO-OPs), new private non-profit, consumer-governed health insurance plans that will help increase competition and give consumers and small businesses additional affordable health insurance choices. CMS is proposing standards for CO-OPs, and for qualifying for $3.8 billion in repayable loans to help start-up and capitalize these new health plans. All CO-OP loans must be repaid with interest and loans will only be made to private, nonprofit entities that demonstrate a high probability of becoming financially viable.

CO-OPs are designed to give consumers and small businesses control over their own health insurance. CO-OPs are private, non-profit insurers governed by their members and offering affordable, consumer-friendly health insurance options. CO-OPs will use any profits to benefit it members, including actions to lower premiums, improve health benefits, improve the quality of members’ health care, expand enrollment, or otherwise contribute to the stability of coverage for members.

The CO-OP program provides for loans to private entities with the goal to create a new CO-OP in every State to expand the number of Exchange health plans with a focus on consumer accountability.

CO-OPs will sell coverage through the State’s Affordable Insurance Exchange as well as have the opportunity to sell coverage to small businesses through the State’s Small Business Health Option Programs (SHOP Exchanges).Several successful health insurance cooperatives currently exist around the country, covering nearly 2 million individuals. A number of diverse groups are organizing to take advantage of this new opportunity.

For more information on today’s announcement, read the fact sheet at:
www.HealthCare.gov/news/factsheets/coops07182011a.html.

Further information on the Consumer Operated and Oriented Plan program, including the determinations of the Federal Advisory Board and information for prospective applicants, can be found at: cciio.cms.gov/programs/coop/index.html

The full text of the Notice of Proposed Rulemaking can be found at http://www.ofr.gov/OFRUpload/OFRData/2011-18342_PI.pdf or http://www.ofr.gov/inspection.aspx

To read the entire CMS press issued on 7/18/2011 please visit:
http://www.cms.gov/apps/media/press/release.asp?Counter=4028

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