Maine Community Health Options has received $62.1 million in federal financing to develop a nonprofit Consumer Operated and Oriented Plan, a new type of insurer model created by the Affordable Care Act. The Centers for Medicare and Medicaid Services announced the award yesterday.
Similar to a mutual insurance company, CO-OPs are run by their customers and intended to offer consumer-friendly, affordable health insurance options to individuals and small businesses, according to the U.S. Department of Health and Human Services website. The customers/members elect the nonprofit's board of directors, and it must use profits to lower premiums and improve benefits. MCHO hopes to be operational in 2014 and offered as a qualifying health plan through a health insurance exchange, although it can be purchased outside an exchange, according to a press release. It's expected to employ 100 Maine people to run the plan.
"MCHO will deliver lower cost and greater stability of premium pricing for Maine's individual and small group markets," said Kevin Lewis, CEO of MCHO, in the release.
Of the total loans awarded by CMMS, $7.1 million is for the development of the subscriber-run plan and $55 million is to support the plan's reserve requirements. All loans will be repaid to the federal government. MCHO is one of 11 organizations nationwide to have received loans through the program.
The issue of a health insurance exchange is a contentious one. States are required to establish an exchange by 2014, but a legislative committee recently nixed a bill to establish Maine's, citing an ongoing challenge to the Affordable Care Act's constitutionality. The U.S. Supreme Court is expected to rule on whether requiring all Americans to buy health insurance by 2014 or face a penalty is unconstitutional.