Twelve Health Reform Consumer Oriented and Operated Plans Approved For 2014

To date, a total of 12 Consumer Oriented and Operated Plans (CO-OPs) have been approved to receive repayable loans to help them establish private nonprofit, consumer-governed health insurance companies, the Centers for Medicare and Medicaid Services (CMS) has announced. The CO-OP plans were created by the Patient Protection and Affordable Care Act (ACA) to give consumers and small businesses more health insurance choices. Starting Jan. 1, 2014, CO-OPs will be able to offer health plans through Affordable Insurance Exchanges in each state, as well as outside of an Exchange. These 12 CO-OPs have been awarded $982,472,104 to develop coverage options in 12 states.


CO-OP loans support the creation of new nonprofit health insurers to promote competition and increase choice in the insurance market, especially for individual and small groups. As consumer-directed organizations, CO-OPs are designed to be accountable to members and responsive to the specific health care needs of plan members by using profits to lower premiums, improve quality, and expand benefits or enrollment.

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. CMS will closely monitor CO-OPs to ensure they are meeting program milestones. Funds can only be drawn down incrementally as milestones are met. To ensure strong financial management, CO-OPs are required to submit quarterly financial statements, including cash flow and enrollment data, receive site visits, and undergo annual external audits. This CMS monitoring is concurrent with the financial and operational oversight of state insurance regulators.

The following five CO-OPs announced on May 18 join seven others announced in February: Michigan Consumer’s Healthcare CO-OP, a coalition of 15 county health plans; Hospitality Health CO-OP, Nevada; Maine Community Health Options (MCHO); Oregon’s Health CO-OP (Incorporated as Community Care of Oregon); and Consumers’ Choice Health Insurance Company (CCHIC), South Carolina. Loan recipients approved in February include: Freelancers CO-OP of Oregon, New Mexico Health Connections, Montana Health Cooperative, Midwest Members Health (Iowa and Nebraska), Common Ground Healthcare Cooperative (Wisconsin), Freelancers CO-OP of New Jersey, and Freelancers Health Service Corporation (New York).

The awardees will receive start-up and solvency loans to fund start-up activities required to become a health insurance issuer and enable them to meet state licensure, solvency, and reserve requirements. Start-up loans must be repaid in five years and solvency loans paid back within 15 years. Like other plans, CO-OPs must meet state and federal standards for qualified health plans to sell coverage through the Exchanges and the state’s Small Business Health Option Programs (SHOP Exchanges.
CMS will continue to review applications, with quarterly deadlines through Dec. 31, 2012, and announce additional awardees on a rolling basis. More information on the CO-OPs is available here.