Chairman Jordan, Ranking Member Cartwright, and members of the committee, thank you for the opportunity to submit written comments about the challenges facing COOPs. I am Devon Herrick, a senior fellow at the National Center for Policy Analysis. We are a nonprofit, nonpartisan public policy research organization dedicated to developing and promoting private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.
Many supporters of progressive health reform wanted a public plan option to compete with the private insurers offering insurance in the state and federal health exchanges. To draw support from progressives, proponents of the Patient Protection and Affordable Care Act (ACA) proposed creation of a type of nonprofit health insurance cooperative that would compete with established health insurers. Consumer Operated and Oriented Plans, or health insurance COOPs, as they are commonly known, were a political compromise during the health care debate, primarily serving as an alternative to the public plan option many progressives wanted.
COOPs are not traditional health insurers. Rather, the organizations are taxpayer-funded, nonprofit health insurance cooperatives established under the ACA. COOPs borrowed funds from the government for start-up costs and solvency reserves. Twenty-four applicants were selected out of a pool of 147 applications. Just over $2 billion was loaned to the 23 applicants that began operations prior to January 1, 2014.