Montana Health Co-op, a new health insurer, to get $58M federal start-up loan

2012-02-21T11:35:00Z 2014-08-25T14:39:30Z Montana Health Co-op, a new health insurer, to get $58M federal start-up loanBy MIKE DENNISON Gazette State Bureau The Billings Gazette
February 21, 2012 11:35 am  • 

HELENA — The fledgling Montana Health Cooperative on Tuesday became one of the first co-ops in the nation to win a federal loan, which will provide $58 million toward setting up the new, member-owned health insurer for Montana individuals and businesses.

“We hope to be an attractive health coverage alternative for as many Montanans as possible,” co-op board member and former State Auditor John Morrison said at a Capitol news conference announcing the award. “We hope to make a significant difference in terms of providing an option.”

Federal officials Tuesday unveiled the awarding of loans totaling $639 million to seven proposed co-ops, which are supposed to be up and running by 2014.

The co-ops were authorized by the controversial 2010 federal health reform law, known as the Affordable Care Act.

A 15-member board that includes people with backgrounds in health, insurance, labor, education and private business has been working more than a year on the Montana co-op, which applied last fall to the feds for start-up funds.

The U.S. Health and Human Services Department gave the Montana co-op a $6.7 million start-up loan to pay for administrative costs of setting up the co-op and another $51 million loan to pay operating costs, such as claims payment.

“Basically we’ve been given a two-year runway to build a new insurance company,” said Eric Schindler, a co-op board member who heads an insurance trust for public school districts.

Other co-ops receiving loans were in Oregon, New Mexico, Wisconsin, New York, New Jersey, and one serving both Nebraska and Iowa. The co-ops have five years to repay the start-up funds and 15 years to repay the operating loan.

The co-op idea has been pitched as a nonprofit alternative to traditional insurance companies. It was inserted into the Affordable Care Act as a compromise, after negotiators killed the “public option,” which would have been a government-run health insurer to compete with private insurance.

U.S. Sen. Max Baucus, D-Mont., played a key role in getting the co-op language into the bill and has fought attempts to cut funding for the co-ops.

Baucus said Tuesday that the $58 million loan is “a smart investment in an authentic, Montana-made solution that will increase competition in the market and help bring down health costs for everyone.”

Morrison said it’s too early to say what sort of premiums the new co-op might charge but that he expects them to be “the most favorable they can be,” given the group’s status as a nonprofit, member-controlled insurer.

Schindler said the co-op board will meet within two weeks to appoint an executive committee, which will then form a select committee to look for a chief executive officer to oversee the co-op.

The co-op plans to have its insurance available for sale by the beginning of 2014.

Morrison also noted that HHS will closely monitor the co-op’s progress, requiring quarterly financial statements, site visits, external audits and the meeting of stated milestones before receiving portions of the money.

Ray Kuntz, chief executive officer of Watkins & Shepherd Trucking and a co-op board member, said competition among health care providers and insurers is fading, and he hopes the co-op will help reverse that trend.

“I have great hope that this health care co-op, by its very nature, will bring competition back into the entire health care system, for the better,” he said. “This is going to be a day that all Montanans will remember, because we’ll see health care costs go down as a result of this citizens’ health care co-op.”

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Follow The Billings Gazette

Popular Stories

Get weekly ads via e-mail

Deals & Offers

Featured Businesses