Administration 'Intensifying' Efforts to Create Nonprofits Despite Budget Cuts, CCIIO Says

Despite $2.2 billion in budget cuts to a program to create nonprofit individual and small group health insurance plans under the health care reform law, the Obama administration is “intensifying” its efforts to get the program going, an official said April 15.

Richard Popper, director of the Center for Consumer Information and Insurance Oversight's Insurance Programs Group at the Centers for Medicare & Medicaid Services, made the comment at a telephone meeting of the Consumer Operated and Oriented Plan Advisory Board. At the meeting, the group approved a draft report that will be sent to the Department of Health and Human Services making recommendations on how loans and grants should be made under the program.

“Even though there was a significant reduction in the subsidy amounts provided for the CO-OP loan and grant program as part of this week's bipartisan agreement on the fiscal year 2011 budget, work is continuing and intensifying on drafting the regulations, the funding opportunity announcement, and other activities that we're going to have to do” to establish the cooperatives, Popper told the group.

Under a fiscal 2011 continuing resolution signed into law by President Obama April 15 to fund the government for the rest of the year, funding for the “CO-OP” program would be cut by $2.2 billion. PPACA provided $6 billion as loans for start-up costs and grants for meeting solvency requirements to be distributed to the CO-OPs by July 1, 2013. The loans are to be repaid in five years and the grants are to be repaid in 15 years.

Regulations Being Written.

Popper said regulations to implement the program are being written now. “There is renewed interest, not only here at HHS, but at higher levels of the administration for detailed discussion on how this reg will be structured, the timeline for producing it, and also the mechanics of how it's [going to] operate,” he said.

As a result of the budget deliberations, there is “much greater awareness” of the program, and “the parties have expressed interest in exploring the establishment of a CO-OP,” Popper said. Despite the current focus on reviewing federal programs to reduce the deficit, “implementation activities are moving forward here at HHS” to create the nonprofit health insurance plans, he said.

The 72-page draft report approved with minor alterations by the advisory board said that HHS should “develop flexible criteria that recognize the diversity of market conditions around the country and enable various models of CO-OPs created and supported by different types of sponsors to develop.”

Consumer control and focus “must be the salient feature of the CO-OP and must be sustained over time,” the draft report said.

In addition, it said CO-OP solvency and financial stability of coverage needs to be maintained; CO-OPs should encourage greater care coordination, quality, and efficiency; and the first loans should be made by the end of 2011 if the CO-OPs are to compete in the health insurance exchange markets to be set up under PPACA beginning in 2014.

By Sara Hansard

The April 15 draft report of the CO-OP Advisory Board is available in HealthDocs™.