Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


HHS Issues Final Co-op Rule to Spur Consumer-Friendly Health Insurance

By John Reichard, CQ HealthBeat Editor

December 8, 2011 -- The Department of Health and Human Services issued a final rule Thursday to establish at least one health insurance cooperative in every state by providing loans from a $3.8 billion federal fund created by the health care law to provide start-up money and fund capital reserves.

“Only a handful of insurance choices are available that are sponsored and managed by entities primarily focused on meeting the health insurance needs and preferences of consumers, as determined directly by consumers or their elected representatives,” the rule says.

The combined membership of co-ops is 2.1 million nationwide. They operate in only four states—Minnesota, Washington, Idaho and Wisconsin—according to the rule. Altogether, they make up a little more than 1 percent of the private insurance market.

The program begins amid considerable skepticism that such new plans will be able to compete against big insurers, whether profit or nonprofit. But the “Consumer Operated and Oriented Plans,” as they are known under the health care law (PL 111-148, PL 111-152), will have visibility in the marketplace created under that measure because they will be offered in new state-based exchanges.

Skeptics question whether the co-ops will be financially viable. But the rule says that “most of those who have expressed interest in the program are provider organizations and small business organizations that are likely to be viable because of their private support, health care experience and business expertise.”

The rule allows multiple co-ops per state “provided that there is sufficient funding to capitalize at least one co-op in each state.”

It adds that “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.” The final rule establishes eligibility standards and sets terms for loans for the co-ops.

The health law originally provided $6 billion for the co-op program but some of that funding was removed. The proposed version of the rule estimated that 57 entities could be funded with the $3.8 billion. John Morrison, head of the National Alliance of State Health Co-ops, said earlier this year that people in 15 states are working on forming co-ops.

Publication Details