ACA Provisions Spur Development of Consumer-Driven Health Plans

The 2010 Affordable Care Act (ACA) creates a new type of nonprofit health insurer known as a Consumer Oriented and Operated Plan, or COOP. The first COOPs will begin operating by January 1, 2014 and can operate locally, statewide or in multiple states, offering health insurance options through Affordable Insurance Exchanges, also known as Health Benefit Exchanges, established in each state.

ACA provisions for COOPs include a COOP loan program that allows eligible nonprofits to apply for two types of low-interest loans:

  • Start-Up loans to assist with start-up activities in developing a COOP. Start-up loans must be repaid in 5 years from the date of disbursement;
  • Solvency Loans to assist in meeting State reserve requirements. Solvency loans must be repaid in 15 years from the date of disbursement.

A group must form a nonprofit member organization that intends to become a COOP before it can apply for a loan under the COOP program. An organization cannot apply for a COOP loan if:

  • An organization, related entity or a predecessor of either, was licensed as an insurance issuer under State law on or before July 16, 2009, or
  • A State or local government is involved in the development or organization of the COOP or provides financial support to the COOP.

Examples of who can sponsor a COOP include small business associations and other business groups; community health centers; health care provider groups and hospitals; academic health centers not affiliated with a State university; unions and 3-share programs; religious organizations; agricultural organizations; Indian tribes; individuals and other interested parties. At least three state medical associations have taken steps to sponsor COOP plans.

Applications for the first-round of awards are due by October 17, 2011. Subsequent applications are due on a quarterly basis thereafter.

The COOP loan program will give preference to applicants who demonstrate:

  • A plan to operate in States with no other qualified applicants;
  • A plan to be able to participate in the first open enrollment period for the Exchanges;
  • Private support; or
  • A feasible plan to operate statewide over time.

Because the ACA encourages COOPs to adopt new strategies for improving patient health and lowering customer costs, the loan program will also give preference to applicants who include:

  • A plan to use an integrated care model or improve coordination of care;
  • A plan to use innovative reimbursement models.

The COOP loan program has a $3.8 billion appropriation. Click here for a copy of New Federal Loan Program Helps Nonprofits Create Customer-Driven Health Insurance Companies.

For more information about the COOP program:

See the Funding Opportunity Announcement explaining the details of the loan program and how to apply at

See the Notice of Proposed Rulemaking (NPRM) detailing proposed standards for COOPS at and

Comments on the proposed rulemaking are due by 5:00 pm on September 16, 2011.

Related articles:

Focus on Health Care Reform: Health Benefit Exchanges, Part 1, 7-23-10, NCMS Bulletin

Focus on Health Care Reform: Health Benefit Exchanges, Part 2, 7-30-10, NCMS Bulletin

Setup of state health care exchange resumes, 8-22-11, The News and Observer


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