HHS Releases Announcements for Healthcare Cooperative Funding

August 1, 2011

As we move closer to 2014 — the real enaction of reform — HHS is offering almost $4B under reform to create consumer-focused healthcare co-ops. Healthcare cooperatives are meant to offer a ready consumer alternative to traditional plans for coverage. Additionally, CMS[1] will be making available $600 million in loans to help start the plans along with another $3.2 billion to help keep them solvent.
As stipulated by the reform law, cooperatives must be nonprofit entities that reinvest extra revenues into either lowering premiums or improving the quality of care. Although they were originally advertized as an alternative to the public option provision (which never materialized), co-ops cannot be run by a government entity. This proviso, in effect, quells consideration that co-op funding will lead to a single-payer necessity based upon funding source.

  1. CMS: As a result, PPACA now envisions a co-op in each state that is run by a not-for-profit corporation and will provide an additional option for state health insurance exchanges to offer to the public. The proposed rule provides guidance on the role of co-ops to promote  integrated models of healthcare and enhance competition in the respective state health insurance exchanges established by PPACA.

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