If the Federal Centres for
Medicare & Medicare Services (CMS) in the US has its way,
competition in the country’s health insurance market is set to
increase.

As a key step towards this
objective, the CMS has taken steps to encourage creation of new
private non-profit, consumer-governed health insurance plans that
will give consumers and small businesses additional affordable
health insurance choices.

The CMS terms the new health
insurance organisations consumer operated and oriented plans, or
CO-OPs.

“CO-OPs will provide
consumers more choices, greater plan accountability, and help
ensure a more competitive insurance market,” said Steve Larsen,
director of the centre for consumer information and insurance
oversight.

CO-OPs that meet standards
laid down by the CMS will qualify to participate in a $3.8bn loan
programme designed to assistance them with start-up and
capitalisation costs.

The CMS has specified that
all loans must be repaid with interest and loans will only be made
to private, non-profit entities that demonstrate a high probability
of becoming financially viable. According to the CMS, several
successful health insurance cooperatives currently exist in the US,
covering nearly 2m individuals.

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“A number of diverse groups
are organising to take advantage of this new opportunity,” noted
the CMS.

“In one state, primary care
providers are working to create a CO-OP to focus on care for rural
areas.

“In another, a CO-OP steering committee has been formed by
interested physicians, technology and business experts, and
community groups.”