A new nonprofit health insurer for Maine will receive $62.1 million in financing from the federal government to help it start offering affordable insurance options to individuals and small businesses in 2014.
Maine Community Health Options will receive the loan money from the federal Centers for Medicare and Medicaid Services. Of the total, $7.1 million is to develop a subscriber-run plan and $55 million is to meet the plan’s reserve requirements.
Congress has appropriated $3.4 billion in loans to establish such insurers.
Maine Community Health Options is a new type of private insurer — a consumer operated and oriented plan — that was created by the federal Affordable Care Act.
The co-ops are a substitute for the government-run public option that was discarded in the final version of the health care overhaul.
The details are still being developed. The goal is to establish co-ops in time to begin enrolling subscribers in October 2013. Coverage will begin Jan. 1, 2014.
Coverage will become available through Maine Community Health Options as the state-run DirigoChoice program is phased out. That subsidized program, which covers 7,000 Mainers, started in 2005 as part of Gov. John Baldacci’s ambitious plan to cover 130,000-plus uninsured Mainers in five years.
Kevin Lewis, CEO of Maine Community Health Options, said he expects the insurance plans to be highly competitive in price. Co-ops must use their profits to lower premiums or improve benefits.
Lewis said he expects that the new insurer will have low overhead, and that its emphasis on consumer-provider partnerships and integrating behavioral health will keep costs down.
Organizers estimate that Maine Community Health Options will have 50,000 subscribers through the health insurance exchange for Maine, many of whom will be eligible for subsidies.
Subscribers will not have to go through the exchange, but the number who will not is harder to estimate, Lewis said.
Health insurance exchanges are another component of the Affordable Care Act, to serve as insurance marketplaces for individuals and small businesses.
Representatives of Maine Community Health Options and the Centers for Medicare and Medicaid Services will announce details of the award and the plan Thursday at a news conference in Lewiston, where the co-op is based.
The effort to form a co-op in Maine was started by the Maine Primary Care Association and its members, said Lewis, the former head of the association. The association, its members and the Maine Health Access Foundation provided startup funding for the project.
The foundation’s hope in supporting the effort is to develop affordable insurance products that are relevant to Maine, accounting for factors such as its transportation, rural nature and older population, said Barbara Leonard, the foundation’s vice president for programs.
“As MCHO is forming itself and figuring out how to develop its products, they are being very conscious of talking to people, small employers, and really trying to identify what the needs are and what the values are in Maine,” she said.
The state Bureau of Insurance knows of no other entity that’s pursuing a co-op in Maine, said Doug Dunbar, a spokesman for the state Department of Professional and Financial Regulation.
Maine Community Health Options has a business plan and is working to develop its network of providers. It has conducted research with focus groups representing consumers, providers and small businesses to shape its plans.
The insurer has a formation board with four members, and ultimately will have a board elected by subscribers. Its staff is expected to grow from the current handful to 10 by year’s end.
It is expected to employ 25 people by the time coverage becomes available in 2014, and to grow to roughly 40 employees within a year or two after that.
Its development loan must be paid back in five years, and the reserves loan has to be repaid in 15.
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