Today, Congressman John Yarmuth (KY-3) said the award of a federal loan to create a Kentucky Consumer Operated and Oriented Plan (CO-OP) will lower health care costs for individuals and small businesses, and make affordable care available to more Kentuckians.
On Friday, the Centers for Medicare & Medicaid Services announced that the Kentucky Health Care Cooperative (KYHC) has received a $58,831,500 federal loan to open the new CO-OP. The CO-OP program, created by the Patient Protection and Affordable Care Act, encourages the creation of nonprofit, innovative, and consumer-responsive health insurance companies to increase competition in the individual and small-business markets. Beginning in 2014, CO-OPs will offer plans through the state-based health insurance exchanges.
"Louisvillians want lower costs and more choice in their health care, and the nonprofit CO-OP will provide both while expanding access to affordable insurance for individuals and small businesses," Yarmuth said. "The state-based exchanges are an integral part of strengthening care under the Affordable Care Act, and I am pleased that Kentucky will be at the forefront of these market-based reforms."
Under the Affordable Care Act, profits gained by a CO-OP must go directly back to their enrollees, to be used to lower premiums, expand benefits, or improve quality.
Joseph E. Smith, Executive Director of the Frankfort-based Kentucky Primary Care Associationand Chairman of the KYHC formation Board, said he is pleased that the U.S. Department of Health and Human Services chose Kentucky for a CO-OP loan.
"As a nonprofit, member-oriented, member-governed health insurance company, KYHC exists to promote community health and well-being by engaging the members and providers it serves in the valued delivery of high-quality, integrated health care services across the Commonwealth," Smith said. "KYHC's key objectives are to improve health care outcomes for our members, enrich the health care experience through promotion of quality, access and reliability, and manage the cost of care for our members by seeking clinical and financial benefits on their behalf."
KYHC is currently working with the Kentucky Department of Insurance to obtain approval to operate as an insurer in the Commonwealth and hopes to offer health plans beginning Jan. 1, 2014. The nonprofit health plan is oriented toward the small group and individual health insurance markets, with a focus on the working uninsured, and will participate in the Health Insurance Exchange -- which begins in 2014 -- as well as offer products outside the Exchange.
According to CMS, in addition to giving consumers more choices and improving competition in their states as consumer-run insurers, CO-OPs will operate differently from traditional insurance companies. More than half of the Board of Directors must be the customers or members of the CO-OP, and all directors must be elected by a majority vote of the members, improving accountability and transparency.
To ensure CO-OPs are truly new entities, the Affordable Care Act prohibits any state-licensed health insurance company that existed on July 16, 2009, from qualifying for the CO-OP program.