A boost for health insurance cooperatives in H.R. 3962

A premise underlying the 2009 push for health care reform is the perception that private, for-profit insurers have not succeeded in providing sufficiently broad access to health insurance at affordable prices. Thus one aspect of the debate has centered, whether rightly or wrongly, on the search for an alternative to private insurance.

The hotly-debated "public option," contained in varying form in both the House and the Senate bills, is one example of such an alternative. Another is the notion of a not-for-profit health insurance cooperative, which received attention last summer as a less-controversial alternative to the public option.

Not-for-profit cooperatives have existed for years in other contexts. One example is in the delivery of electricity to rural areas--Colorado's is just one example of such a cooperative. A few health insurance cooperatives have also existed for years. Current examples include HealthPartners in Minnesota and the Group Health cooperative based in Seattle, Washington.

The Democrats continue to battle for the survival of the public option. So, there's no deep dive into the cooperative approach in the House version of health care reform (H.R. 3962). However, via Act Sec. 310, the House does put its toe in the water.



Under Act Sec. 310, within six months after the President signs the bill, the new Health Choices Commissioner must form a Consumer Operated and Oriented Plan (the "CO-OP" program) under which grants and loans may be made for the establishment of not-for-profit health insurance cooperatives.

The Act authorizes the appropriation of five billion dollars (for fiscal years 2010 through 2014) to provide for the grants and loans. The grants and loans are intended to fulfill two purposes: (1) assist the cooperatives with their start-up costs and (2) help them comply with state solvency requirements.

While eligible cooperatives may operate through either the federal Health Insurance Exchange or a State-based Health Insurance Exchange, states are not required to establish a cooperative.

Cooperatives must meet certain conditions in order to be eligible for the grants or loans. For example, in addition to being not-for-profit, the cooperative's membership must consist entirely of beneficiaries of the insurance coverage offered by the cooperative.

A similar (though not identical--scroll to Act Sec. 1322) provision is contained in the version of the Senate bill that will be debated (and debated, and debated) after Thanksgiving.