Health Insurance Reform under the Fiscal Cliff Agreement – Mostly Left Untouched

The health insurance reform provisions of the Affordable Care Act were mostly left untouched under the recently passed budget agreement to avert the fiscal cliff, with one exception. The bill rescinds the remaining, unobligated funding in the Consumer Operated and Oriented Plan (CO-OP) program, ending new grants and loans for these fledgling health plans. The rescission would garner an estimated $200 million in savings over five years, according to the Congressional Budget Office (CBO).

The CO-OPs were originally included in the ACA as an alternative to the public plan option. The provision creating the CO-OP program required the Department of Health and Human Services (HHS) to provide $6 billion in grants and loans for the creation of non-profit health insurance plans. The CO-OPs, as their name implies, are supposed to be consumer oriented, and can’t be owned by a traditional health insurer. While many observers, including me, have had doubts about whether these new plans can successfully compete against traditional insurers, HHS has, to date, provided 24 non-profits with almost $2 billion in grants and loans. These non-profits are located in 24 different states, from Arizona to Wisconsin. A full list of the plans is available here. They include such organizations as the Colorado Health Insurance Cooperative, an initiative sponsored by the Rocky Mountain Farmers Union Educational and Charitable Foundation and the Maine Primary Care Association, made up of the state’s community health centers. Other CO-OPs, such as the Montana Health Cooperative, were formed by a coalition of local business owners and community leaders.

These CO-OPs have been awarded significant start-up and solvency loans (ranging from $33 to $174 million) to build their capital reserves and develop the governing, administrative and operational capacity to run a health plan. The budget deal does not take away funds that have already been obligated, so these plans will continue to develop and we can expect them to compete in the new health insurance exchanges in 2014.

While some Washington observers had speculated that the fiscal cliff bill would amend other health insurance reform provisions of the ACA, that did not happen. So it’s business as usual – and at a breakneck pace – to prepare for 2014!

For more on implementation of the ACA, keep an eye on CHIRblog – we’ll keep you updated.

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