Phoenix nonprofit receives $93M federal loan to make available affordable health coverage

A $93 million loan has been granted to a new nonprofit by the federal government to begin a health medicare insurance company to provide affordable health coverage to small businesses and individuals in Arizona.

The Centers for Medicare Supplement Plans and Medicaid Services which administers Medicare Plan is providing the loan to Compass Cooperative Health Network to operate a Consumer Operated and Oriented Plan, or CO-OP. Initiated by the Affordable Care Act, it will launch in January 2014. The new CO-OP will contend with big commercial carriers, such as Cigna HealthCare of Arizona, Humana Inc. and United Healthcare of Arizona. This has potential of changing the look health care coverage in Arizona.

The Centers for Medicare and Medicaid Services forbid the large insurance types from applying for loans. The health reform law bars any state-licensed health insurance company that existed on July 16, 2009 from eligibility for the CO-OP program, according to CMS. Till date, CMS has granted $1.2 billion in loans to 14 nonprofits offering coverage in 14 states. Compass is the only one to obtain funding in Arizona till now.

These medicare advantage plans will not need underwriting, a process employed to decide the risks involved a person depending on their health conditions. In its place, the policies will be guaranteed issue, which implies they will offer a policy to customers irrespective of health status.

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