Multi-State Plans, Compacts and Co-ops

Through the state exchanges, distinct new coverage options will be available. The law will require that multi-state plans be made available across the nation and states will be encouraged to set up “healthcare choice compacts” and insurance co-ops. This section outlines how these options will function.

Will state exchanges give small business owners and individuals more choices of insurance plans? And will consumer protections and price limits still apply?

Yes. The law requires that at least two multi-state plans be offered in each state exchange. On March 11, 2013, the HHS secretary issued regulations for multi-state options that can be entered into. Multi-state plans are required to be phased in over four years, with issuers offering them in 60% of states during the first year of the program, 70% during the second, 85% during the third, and all states and the District of Columbia by the fourth year.

Private insurers will be able to offer multi-state plans through the exchange. These plans will be subject to the same requirements as other qualified plans offered in the exchange, including the consumer protection laws of the purchaser’s state, and the secretary has to be assured that the policy will not weaken enforcement of state consumer protection laws.

The agency that will oversee multi-state plans is the Office of Personnel Management (OPM), which is the federal agency that runs the Federal Employee Health Benefits Program. This agency covers federal employees and their families nationwide. It also includes members of Congress and their families. Once the exchange is operational, members of Congress, congressional staff and their families must purchase their healthcare coverage through the exchange just like small businesses and individuals.

States will also be able to form “healthcare choice compacts” with other states to permit cross-selling of insurance. Insurers will be able to sell in any state in the compact. They will be subject to the laws of each state where coverage is issued or written except for consumer protection, network adequacy, market conduct or unfair trade practices. The compacts may only be approved if they provide coverage that is at least as comprehensive and affordable as any other coverage offered through the exchange. Governing regulations will be issued by July 1, 2013; compacts may not be established before 2016.

When will new nonprofit insurance co-ops be available in my area? How will they work?

The new insurance co-ops are not mandated, but are encouraged. A new program will encourage the development of nonprofit, member-run cooperatives in each state.  An advisory board was named in 2010 to help the government make decisions on offering loans and grants to start new co-ops; priority will be given to entities that offer statewide coverage. Starting January 1, 2014, co-ops will have to meet the same standards as other insurers to sell health plans through the exchanges.

In January 2013, the American Taxpayer Relief Act was passed, eliminating additional funding for co-ops. HHS had already distributed approximately $1.9 billion (of $3.8 billion in authorized funding for the program) to the 24 plans that have already been created. The American Taxpayer Relief Act eliminates all unobligated CO-OP funds, while setting aside 10% of the unobligated funds to help with administrative costs for the 24 plans already created.

Setting up a co-op can be time consuming. Private co-op health plans have been established in some states and have generally taken a number of years to set up. These new entities can’t be an existing insurer or a government entity. Loans and grants may help speed up the process.

The bottom line: It will be up to parties in the states to take the initiative to set up an insurance co-op with federal support and funding. Find more information here.