Health Law's CO-OPs Hit Wall in Fiscal Cliff Deal

No new consumer-governed Consumer Operated and Oriented Plans will be federally funded in the 26 states still applying for startup capital loans after Congress cut the remaining $1.4 billion from the budget in Tuesday's hurried deal to avert the sequestration and tax hikes of  the "fiscal cliff," according to a report by Kaiser Health News.

The Patient Protection and Affordable Care Act initially allotted $6 billion in federal loans to states to launch the non-profit, member-owned plans that would use all profits to lower premiums, increase benefits or enhance stability. Congress reduced that total to $3.4 billion in 2011 after sweeping budget cuts, according to the report.

HHS has granted nearly $2 billion to 24 CO-OPs in 24 different states, and that money is unaffected from the budget cut, according to the report. Illinois became the 24th and last state to receive CO-OP funding with a $160 million loan in December.

In a news release today, John Morrison, president of the National Alliance of State Health CO-OPs, said the cut was "bad policy that was done quickly and quietly in the dark to stop the progress of CO-OPs."

"This fiscal cliff agreement gives the health insurance giants their wish, torpedoing CO-OPs in the 26 states where they are not yet approved," Mr. Morrison said in the release. "The cut to the CO-OP program was not about federal spending…it was about the health insurance giants attempting to eliminate competition at the expense of millions of Americans who will pay higher premiums due to a lack of competition."

More Articles on Health Insurance CO-OPs:

HHS Approves Illinois Insurance Co-op With $160M Startup Loan
HHS: Up to 40% of Health Insurance Co-op Loans Could Default
Congress Passes Fiscal Cliff, SGR Deal at Hospitals' Expense

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