A last minute deal to avert the fiscal cliff contained bad news for the future of health co-ops.
The Affordable Care Act set aside $6 billion to be used as loans for new non-profit, customer-owned insurance plans. The idea was that each state would have a health co-op that could compete with traditional insurers, in theory, driving down prices.
Twenty-four health co-ops secured funding in earlier rounds of applications. But the fiscal cliff deal effectively turned off the faucet while New Hampshire’s submission was still pending.
John Morrison with the National Alliance of State Health Cooperatives believes the industry didn’t look too kindly on the competition, and lobbied for cuts in the fiscal cliff deal.
“Large insurance companies or others who don’t want CO-OPs to continue to get traction have nipped this program in the bud,” says Morrison.
Critics of health co-ops have raised doubts about their ability to pay back government loans.
The government will continue to finance all co-ops approved before December 31st.