On January 13, 2011, the Consumer Operated and Oriented Plan (CO-OP) Advisory Board, which was established by the Affordable Care Act, took testimony and shed light on the new program. The purpose of the meeting was to assist and advise the Secretary and Congress through the Department of Health and Human Services' newly created office of Office of Consumer Information and Insurance Oversight (OCIIO) on the strategy to foster the creation of qualified nonprofit health insurance issuers. Moreover, the Advisory Board took testimony concerning the award of grants and loans related to Section 1322 of the Affordable Care Act.

The Advisory Board took testimony from panels during the day-long hearing that included policy experts, consumer groups, small insurance costs, and state regulators.

Several themes arose in the discussion. These themes focused around the challenges involved in starting up a new nonprofit health insurance issuer. These challenges include overwhelming start-up costs, the difficulty in building provider networks, the need to maintain sufficient funds to meet solvency and other state requirements, the challenge of building critical mass so as to avoid adverse risk selection, and the importance of experienced management in getting the organization off the ground. Other challenges, underscored strongly by state Insurance Commissioners, include the desire to regulate new CO-OPs on an even playing field with other insurance organizations. The insurance commissioners indicated that state regulation would preserve the stability of the individual and small group insurance markets, avoid adverse risk selection, and foster competition.

Under the Affordable Care Act, the new CO-OP organizations, fueled by grants and loans recommended by the Advisory Board, are directed by Act to be operational by 2014. The Advisory Board will meet again on February 7, 2010.

Written testimony is available at: http://www.hhs.gov/ociio/initiative/index.html