Health Care

January 4, 2013

‘Fiscal cliff’ deal takes money off table for Kansas insurance cooperative

The initiative to start the first health insurance cooperative in the state under the Affordable Care Act has hit a roadblock.

The initiative to start the first health insurance cooperative in the state under the Affordable Care Act has hit a roadblock.

A shift in funds that occurred as part of the “fiscal cliff” agreement means new loans for the insurance cooperatives aren’t available.

“We feel a little bit like Charlie Brown when Lucy pulls away the football,” said Tim Witsman, board president of the Kansas Health Cooperative and president of the Wichita Independent Business Association.

Consumer Operated and Oriented Plans – or co-ops – were created as part of the Affordable Care Act. The goal was to establish co-ops in all 50 states to create nonprofit health insurance exchanges.

The co-ops have to pay back the loans to the federal government with interest.

The American Taxpayer Relief Act of 2012 rescinds about $2.3 billion that would have been allocated to future Consumer Operated and Oriented Plan loans, according to the Congressional Budget Office.

Co-ops that have already been created will not have funding taken away and about 10 percent of the current unobligated funds will be used to continue to fund existing co-ops.

“We don’t know where we’re going from here. We’re disappointed,” said Anne Nelson, Kansas Health Cooperative project officer and associate executive director of Central Plains Health Care Partnership, an affiliate of the Medical Society of Sedgwick County.

“We think we have a wonderful model and design and hope there is some opportunity in the future to bring it to fruition.”

Kansas Health Cooperative first submitted its loan application in late September and then met with consultants in Washington, D.C., as part of the review process in October.

In November, the Kansas Health Cooperative received a message from CMS saying that the application looked promising but that the group should reapply in December, Nelson said. The application was resubmitted Dec. 28.

So far, 24 states’ nonprofit co-ops have received between $33 million and $175 million each, according to Health and Human Services. A co-op for Illinois was the only one to receive an award in December, according to

Cooperative Network, a trade association for more than 600 member cooperatives in Minnesota and Wisconsin, assists in developing co-ops around the country – including the Kansas Health Cooperative – through a grant from the Department of Agriculture.

“This was an opportunity for the private sector to come together and create a private sector solution,” said Bill Oemichen, president and CEO of Cooperative Network. “This was something supported by people of different political stripes, which is why this is so perplexing.”

Oemichen said groups developing the co-ops “spent significant local dollars on actuaries, attorneys and marketing consultants, all for naught.”

Witsman said he doubts there will be other funding options for the start-up costs of the exchange.

“I have no idea where one could get that kind of start-up or reserve loans,” Witsman said. “It doesn’t mean that we won’t look at other things to do in the state, but I don’t see people saying ‘Gee, let me give $80 million to get this thing started.’ ”

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