Fiscal cliff deal wipes out health CO-OP funding

Chalk this one up as a win for the big guys. Health insurers won't likely be seeing much competition from a potentially new source of health insurance--consumer oriented and operated plans (CO-OP).

That's because the fiscal cliff agreement, which was approved by Congress on New Year's Day, all but nixed funding for the non-traditional health plans authorized under the health reform law.

The CO-OPs were designed to be nonprofit, customer-owned and operated plans that would offer an alternative to the traditional insurance companies on health insurance exchanges, The Washington Post's Wonkblog reported.

To aid in their creation, the reform law allocated $3.8 billion in loans, $1.9 billion of which has already been provided to 24 nonprofit organizations in 24 states. Although the fiscal cliff deal doesn't require the groups to repay loans already received, it does eliminate most of the remaining $1.9 billion, reported The Hill's Healthwatch.

That leaves the 24 or so applicants that were in the process of applying for federal CO-OP funding without any money to start up the insurance company, John Morrison, president of the National Alliance of State Health Cooperatives, told Kaiser Health News.

"The health insurance industry is getting its way here by torpedoing co-ops in the 26 remaining states," Morrison said. "This is not about budgets; it is about those health insurance giants killing competition at the expense of millions of Americans who will pay higher premiums because of it."

To learn more:
- read the Washington Post's Wonkblog article
- see The Hill's Healthwatch article
- check out the Kaiser Health News article


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