CO-OP health plans awarded $640M in federal grants

Competition within the health insurance industry could potentially increase now that consumer-governed health plans have received a big financial boost to get them up and running.

The Centers for Medicare & Medicaid Services on Tuesday announced it's loaning $640 million to help seven consumer-operated and -oriented plans (CO-OP), which were authorized by the health reform law, establish themselves in eight states, reported The Hill's Healthwatch.

CO-OP health plans, which are run by their customers and provide coverage to individuals and small businesses, should increase competition among insurers, pressuring them to maintain or improve costs and coverage, the Associated Press reported.

"People from all walks of life are dissatisfied with the status quo, and believe that our health care and health insurance system can be dramatically improved," John Morrison, a former Montana insurance commissioner, told Kaiser Health News.

As the administrator of the CO-OP program, CMS will disperse funds from the low-interest loans to the CO-OPs as they meet certain benchmarks, including setting up claims processes, establishing provider relationships and creating disease management controls, the AP noted.

CMS said it plans to grant more loans to CO-OPs soon with the goal of launching at least one nonprofit CO-OP plan in every state, KHN noted.

The seven CO-OPs receiving loans are Freelancers CO-OP of New Jersey, New Mexico Health Connections, Midwest Members Health in Iowa and Nebraska, Common Ground Healthcare Cooperative in Wisconsin, Freelancers CO-OP of Oregon, Montana Health Cooperative and Freelancers Health Service Corporation in New York.

The new CO-OP plans will start providing coverage in 2014 and will be available for purchase through state health insurance exchanges.

To learn more:
- read The Hill's Healthwatch article
- see the KHN article
- check out the AP article