42 U.S.C. § 18042 — Federal program to assist establishment and operation of nonprofit, member-run health insurance issuers

(a) Establishment of program
The Secretary^* must run a program called the Consumer Operated and Oriented Plan program, or CO-OP program. Its purpose is to help create nonprofit health insurers that sell qualified plans in the individual and small-group markets in the states where they are licensed.

(b) Loans and grants under the CO-OP program
The Secretary must award, to people applying to become qualified nonprofit insurers: loans to cover start-up costs, and grants to help meet states' solvency requirements. In deciding who gets loans and grants, the Secretary must follow the advice of an advisory board, described below; favor applicants offering statewide plans, using integrated care models, and having strong private support; and try to fund at least one qualified nonprofit insurer per state^*, though funding more than one in a state is allowed if there is enough money. If no insurer applies in a state, the Secretary can use the program's money to encourage a new nonprofit insurer to start there, or an existing one from another state to expand in.

Anyone getting a loan or grant must sign an agreement to keep meeting the qualification rules and any conditions in the agreement. The agreement must bar using any of the money for lobbying or for marketing. If the Secretary finds someone broke these rules and did not fix it within a reasonable time, they must repay 110 percent of all loans and grants received, plus interest for the time the money was outstanding; the Secretary must also notify the Treasury if this leads to losing tax-exempt status. The Secretary must award all CO-OP loans and grants, and start distributing the money, by July 1, 2013.

Before awarding any loans or grants, and by July 1, 2013, the Secretary must write regulations on repayment that fit state solvency rules. Loans must be repaid within 5 years and grants within 15 years, factoring in state reserve and solvency requirements.

An advisory board of 15 members, appointed by the Comptroller General from among people with specified qualifications, advises the Secretary on these awards. Members must meet ethics and conflict-of-interest standards guarding against insurance-industry interference. The first appointments had to happen within 3 months of March 23, 2010, and any vacancy is filled the same way as the original appointment. Members get no pay for serving, only travel expenses. Certain federal advisory-committee rules apply to the board, with one exception. The board ends when it finishes its duties or on December 31, 2015, whichever comes first.

(c) Qualified nonprofit health insurance issuer^*
A "qualified nonprofit health insurance issuer" is an organization that is set up as a nonprofit member corporation under state law, and whose activities mostly consist of selling qualified plans in the individual and small-group markets in the states where it is licensed, plus meeting the other requirements below. An organization does not qualify if it, or a related entity or predecessor, was already a health insurer on July 16, 2009, or if it is sponsored by a state or local government, or any subdivision or instrumentality of one.

An organization also does not qualify unless: its governance is decided by a majority vote of its members; its governing documents include ethics and conflict-of-interest standards against insurance-industry interference; and, under the Secretary's regulations, it operates with a strong consumer focus, including timeliness, responsiveness, and accountability to members. Any profits the organization makes must go toward lowering premiums, improving benefits, or other programs that improve the quality of care for its members. It must also meet every requirement other issuers of qualified plans must meet in each state where it operates, including solvency, licensure, provider-payment rules, network adequacy, rate and form filing, state premium assessments, and other state laws referenced elsewhere in this part. Finally, it cannot offer a plan in a state until that state, or the Secretary standing in for the state, has put the required insurance-market reforms in effect.

(d) Establishment of private purchasing council
CO-OP issuers may form a private purchasing council to jointly buy things like claims administration, administrative services, health information technology, and actuarial services, to save money. The council cannot set payment rates for health facilities or providers. Antitrust laws still fully apply to the council and to any CO-OP issuer that takes part in it.

(e) Limitation on participation
No representative of a federal, state, or local government, or any subdivision or instrumentality of one, and no representative of an organization excluded under subsection (c) for having been a pre-2009 insurer, may sit on a CO-OP issuer's board or on a purchasing council.

(f) Limitations on Secretary
The Secretary cannot join negotiations between CO-OP issuers, or their purchasing council, and health facilities or providers, including drug^* makers, pharmacies, or hospitals, and cannot set or maintain a price structure for reimbursing any benefits these issuers cover. Nothing here lets the Secretary interfere with competition among CO-OP issuers.

(g) Appropriations
$6,000,000,000 is appropriated, from any Treasury funds not already committed, to run this program.

(h) Omitted
This subsection was left out of the U.S. Code text.

(i) GAO study and report
The Comptroller General must run an ongoing study of competition and market concentration in the health insurance market after this law's reforms take effect, including looking at new insurers entering the market. Starting with 2014, the Comptroller General must report the results, and any recommended legislative or administrative changes, to Congress by December 31 of each even-numbered year.