Health plan advocates slam 'cliff' deal cuts

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That $3.4 billion program was established by President Obama's signature healthcare law.

Just under $2 billion has been obligated to the 24 CO-OPs that have already signed loan agreements with the Department of Health and Human Services (HHS). The "cliff" deal cut the rest of the program's funding.

National Alliance of State Health CO-OPs (NASHCO) blasted the agreement as a win for entrenched, for-profit insurance interests over the needs of up-and-comers.

"Since long before the fiscal cliff agreement, the big health insurance companies have fought the new CO-OPs because they represent a real opportunity to lower health insurance premiums and allow consumers to belong to a member-governed heath insurer," NASHCO President John Morrison said in a statement Thursday.

"The cut to the CO-OP program was not about federal spending ... it was about the health insurance giants attempting to eliminate competition at the expense of millions of Americans who will pay higher premiums due to a lack of competition."

The spending deal will not jeopardize funding for the 24 CO-OPs that have already signed agreements with HHS, NASHCO said.

The group lamented that the cuts will nullify applications submitted on Dec. 31 by more than 24 more would-be participants in the program.

"These applicants should at the very least have the opportunity to be reviewed and rewarded on their merits," Morrison said.

—This post was updated at 5:02 p.m.