Co-op health plan gets U.S. loans - Las Vegas Review-Journal

A new, nonprofit health plan is coming to Nevada as part of federal health reform.

The Centers for Medicare & Medicaid Services awarded a loan Friday to a Las Vegas coalition to start a statewide, consumer-governed health insurance company called a consumer operated and oriented plan.

Hospitality Health CO-OP received two loans totaling $65.9 million to begin offering health plans through insurance exchanges established under the Patient Protection and Affordable Care Act.

Hospitality Health CO-OP is sponsored by the Culinary Health Fund, its national parent UNITE HERE Health and the Health Services Coalition, a local consumer advocacy group that negotiates health care costs and tracks quality of care for more than 300,000 members employed by cities, unions and major corporations.

The co-op program is designed to encourage groups to create health insurance companies to increase competition in the individual and small-business markets. Plans would be available in 2014.

The loan goes mostly to the state Insurance Division to ensure the co-op has assets to pay its claims. Such solvency requirements are partly what makes it so difficult for new health plans to start up, said Bobette Bond, public policy director for the Culinary Health Fund.

The co-op will pay the loans back from profits. One loan has a five-year term and the other 15 years. Interest rates are pegged to Treasury rates and are "very low," said Jack Cheevers, a spokesman for the Centers for Medicare and Medicaid Services. Once the loans are paid off, profits must by law go to cut premiums, expand benefits or improve quality.

The Centers for Medicare & Medicaid Services says it will "closely monitor" co-ops through quarterly financial statements, cash flow numbers, enrollment data, site visits and annual external audits. State insurance regulators will help with oversight, the agency said.

More than half of the co-op's board members must be customers or members, and directors must be elected by a majority member vote.

To ensure that co-ops are truly new organizations, federal law bans any state-licensed health insurer that existed on July 16, 2009, from qualifying to offer plans through the program.

The program will be a big help in a state with one of the nation's highest rates of uninsured, Bond said.

"We think there's a large market out there," she said. "Our first goal is to really reach out to small businesses and individuals with families and try to offer a product that's a little simpler than products in the existing commercial market. Our second goal is to offer plans to people who are really not happy with their current insurance."

Bond said it's too early to estimate how many customers the co-op might serve.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.