Administration announces first reform law loans to nonprofit insurance co-ops


The loans must be repaid over five years. They can only be used to cover start-up costs, not lobbying or marketing; the administration will award more money later to help ensure that the new products have enough cash on hand to cover unexpected claims.

The co-ops have received a fair amount of criticism, with liberals doubting their ability to attract enough patients to have the market clout necessary to bring healthcare costs down. Conservatives, meanwhile, point out that the Health and Human Services Department itself has predicted a 40 percent default rate for the start-up loans.

The first round of awards went to: 

• Midwest Members Health in Iowa and Nebraska ($113 million);

• Montana Health Cooperative ($58 million);

• Freelancers CO-OP of New Jersey ($107 million);

• New Mexico Health Connections ($70 million);

• Freelancers Health Service Corporation of New York ($174 million);

• Freelancers CO-OP of Oregon ($59 million); and

• Common Ground Healthcare Cooperative of Wisconsin ($56 million).