In June 2010, the Department of Health and Human Services tasked 14 experts including one actuary, attorneys, consumer advocates, regulators, and financial experts with finding the best strategy to aid in the development of new CO-OPs, or private, non-profit health insurers with a board made up of members who are also customers. NovaRest Founder Donna Novak served as the Finance Subcommittee Chair of this committee. The U.S. Department of Health and Human Services spent the last 3 months reviewing the committee’s recommendations and have now turned them into an action plan.
On July 18, HHS proposed standards for establishing CO-OP health insurance plans. According to healthcare.gov, eligible organizations seeking to establish a CO-OP will be able to apply for a portion of the $3.8 billion in repayable loans made available under the Affordable Care Act to fund start-up and capitalization costs. A CO-OP will have the option to sell coverage to small businesses. Small business owners will be able to go through a new competitive insurance marketplace for small businesses known as a Small Business Health Option Program or “SHOP.” The proposed rule ensures that a CO-OP that offers any coverage to small businesses also participates in SHOP.
CO-OPs will meet the same standards as all other health insurers in the state where they offer coverage. Starting January 1, 2014, CO-OPs and all other health insurers will have to meet a set of standards in order to sell health plans through the new Exchanges. As an extra protection, CO-OPs will also demonstrate that premiums and any federal loans are being used appropriately and for the benefit of enrollees.
The rule also proposes that CO-OPs have a management team with expertise in health insurance, and that the board includes individuals with expertise in the business of insurance.