In the latest step to implement health care reform, federal officials on Monday rolled out $3.8 billion in loans for nonprofits so they can offer less-expensive plans within the new health insurance exchanges.
The aim is to encourage nonprofit cooperatives to be up and running by the time the exchanges launch in 2014. As consumers select from a variety of plans, the co-ops are expected to provide lower-cost options than what private insurance companies could offer.
“These co-op plans are to be nonprofit, brand-new health insurance plans to operate with a specific focus,” said Richard Popper, head of the insurance programs office at the Centers for Medicare and Medicaid Services. “They’re to provide higher quality and a more cost-affordable marketplace.”
Along with selling coverage through the exchanges, the co-ops also can sell coverage to small businesses through a small business health options program (SHOP), also created under the Affordable Care Act. The idea is that the co-ops would be able to cut costs to consumers by offering freedom from the revenue-driven aims of private insurers.
All profits generated by the co-ops must be put back into the insurance plans.
“Any surplus revenue has to be used to lower member premiums or improve the benefits or quality of health insurance,” Mr. Popper said. “That’s the key differentiating factor.”
But Paul Hazen, president of the National Cooperative Business Association, said he’d rather see the co-ops owned by consumers instead of operating as nonprofits.
“What we find in the cooperatives is if you actually have an ownership stake, you’re going to be much more in tune with the business, versus if it’s a nonprofit and you don’t have any economic activity in the organization,” Mr. Hazen said.
He also worries that Centers for Medicare and Medicaid Services isn’t offering co-ops enough incentive to get off the ground. Co-ops are an important alternative to private insurers, especially in states with only one insurance provider, he said.
“They haven’t had startup money, so while these loans will be good, the challenge is how will you gather up the resources to get organized,” Mr. Hazen said. “I think some of this money should have been used for grants.”
Proposed two years ago by Sen. Kent Conrad, North Dakota Democrat, co-ops originally were discussed as an alternative to the publicly funded health care plan hoped for by Democrats. They were included in the final bill, but only as one alternative among many to be offered through state-based insurance exchanges.
Intended to make health insurance options more accessible to middle-class workers, the exchanges will be open to all, but only those earning up to 400 percent of the federal poverty level will be eligible for subsidies.
• Paige Winfield Cunningham can be reached at pcunningham@washingtontimes.com.
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