The top insurance regulator in Vermont has refused to grant a health insurance company license to organizers of the Vermont Health CO-OP.
The organizers are trying to set up a nonprofit, member-owned plan that would be part of a Consumer Operated and Oriented Plan (CO-OP) program created by the Patient Protection and Affordable Care Act of 2010 (PPACA).
Sen. Max Baucus, D-Mont., and other PPACA drafters included the CO-OP provision in PPACA in an effort to increase the number of carriers competing for commercial customers' business. CO-OP program supporters pointed out that one or two carriers write the majority of commercial health insurance business in many states.
CO-OP organizers can get startup loans from the U.S. Department of Health and Human Services (HHS), but they cannot get funding from existing for-profit or nonprofit health insurers, and PPACA forbids managers from selling CO-OPs or converting CO-OPs to for-profit status.
To get a Vermont insurance company license, a company must show that it has enough funds to pay claims and debt, and that its managers have enough financial, insurance and business experience, according to officials at the Vermont Department of Financial Regulation.
Susan Donegan, the department's commissioner, believes that the Vermont CO-OP's rates would be significantly higher than its major competitors' rates, and that organizers have failed to show how the CO-OP would attract the projected number of subscribers or sustain solvency, officials said.
Christine Oliver, the chief executive officer of the Vermont CO-OP, said in a statement that the CO-OP will move forward.
"We remain committed to delivering an alternative to the traditional insurance companies—an alternative that provides Vermonters a real voice in their coverage and in their care," Oliver said in the statement. "It is very clear that Vermonters want – and they certainly deserve – a health insurance option that puts their personal health ahead of profits."
Vermont regulators have not licensed a new health insurance provider in more than 50 years, and they may not be accustomed to considering new providers, Oliver said.
"We look forward to addressing, through appropriate channels, what we believe are the factual errors and mischaracterizations of the decision," Oliver said.
