Illinois sets sights on health insurance co-op

Illinois Health Insurance Exchange
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Illinois Health Insurance ExchangeIllinois announces plans for health insurance co-op

As the Affordable Care Act inches closer to becoming fully enacted in 2014, states are making moves on the health insurance exchanges that the law requires them to host. These health insurance exchange systems are meant to be online marketplaces where consumers can find affordable health insurance policies. Several states have chosen not to build or operate their own insurance exchange but others, such as Illinois, have been considering a somewhat less popular approach to the issue.

Co-op could be a decent alternative to exchange program

Illinois Governor Pat Quinn is now considering a new approach to the health insurance issue that may be entirely compliant with the Affordable Care Act. The Governor is pushing for a health care “co-op,” which are non-profit health plans that are associated with the federal health care law. These co-ops are privately owned by the members that invest in them and must funnel any profits they generate into improving the quality of health care and lowering premiums. While co-ops are not a complete replacement for a health insurance exchange program, they may provide a distinct alternative for states that have shown no interest in building an exchange system themselves.

Starting a co-op is no easy task

There are significant concerns that Illinois will not be able to support a co-op health insurance initiative. Starting an entirely new health insurance program is a major feat, especially financially. Health insurance organizations are required by Illinois and federal law to carry massive cash reserves in order to account for catastrophic events that may lead to a high number of claims and payouts. These reserves ensure that policyholders can receive the benefits they need in a timely manner.

State receives financing from federal government

The Department of Health and Human Service has issued some $4 billion in loans to states that have shown interest in developing health insurance co-ops. Illinois have received some $160 million loan for its endeavors. Illinois is also seeking to obtain a license that would allow it to host a health insurance co-op. Thus far, the co-op initiative coming from the state is the only one in Illinois that may be able to receive the approval of the Department of Health and Human Services.

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