CO-OPs make it past PPACA Supreme Court rapids

By National Underwriter

National Underwriter

By Allison Bell

The Consumer Operated and Oriented Plan program is one of the Patient Protection and Affordable Care Act (PPACA) programs that will move ahead as a result of the new Supreme Court decision upholding PPACA.

The court ruled 5-4 Thursday in NFIB vs. Sebelius that Congress does have a constitutional right to impose a tax on individuals who fail to buy health insurance and that opponents of the law cannot use concerns about the provision to block implementation of the law as a whole.

PPACA drafters came up with the CO-OP provisions in an effort to offer individuals and small businesses more affordable, consumer-friendly health insurance options in states where one or two carriers dominate the individual and small group markets.

Congress has appropriated $3.4 billion in CO-OP loan funding. Organizers can use the loans to start nonprofit, member-owned health insurers that will sell health coverage to individuals, small groups or both through the new health insurance exchanges, or Web-based insurance supermarkets, that are supposed to start up in 2014.

The U.S. Department of Health and Human Services (HHS) recently announced that it has awarded a $59 million CO-OP loan to the Kentucky Health Care Cooperative and a $34 million CO-OP loan to the Vermont Health CO-OP, which is incorporated as the Consumer Health Coalition of Vermont.

Earlier in the month, the department awarded CO-OP loans to Arizona and Connecticut.

HHS has awarded a total of $1.2 billion in funding to CO-OP organizers in 16 states.

The first round of applications was due Oct. 17, 2011, and the last application deadline will be Dec. 31, 2012.

John Morrison, president of the National Alliance of State Health CO-OPs (NASHCO), Helena, Mont., says a majority of states now have CO-OP development groups in various stages of the application process.

California, for example, is developing a bill that would create a regulatory framework for CO-OPs in that state.

The Supreme Court decision supporting the constitutionality of PPACA provides "increased momentum for the health CO-OP movement," Morrison says. "Health CO-OPs will begin enrolling customers in October 2013, and will offer health insurance plans on the state exchanges beginning in January 2014."

The CO-OPs want to work with state and local governments, the federal government and their communities to make sure PPACA implementation proceeds on schedule, Morrison says.

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