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.

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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.”