U.S Code last checked for updates: Jun 25, 2024
§ 18042.
Federal program to assist establishment and operation of nonprofit, member-run health insurance issuers
(a)
Establishment of program
(1)
In general
(2)
Purpose
(b)
Loans and grants under the CO–OP program
(1)
In general
The Secretary shall provide through the CO–OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of—
(A)
loans to provide assistance to such person in meeting its start-up costs; and
(B)
grants to provide assistance to such person in meeting any solvency requirements of States in which the person seeks to be licensed to issue qualified health plans.
(2)
Requirements for awarding loans and grants
(A)
In general
In awarding loans and grants under the CO–OP program, the Secretary shall—
(i)
take into account the recommendations of the advisory board established under paragraph (3);
(ii)
give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and
(iii)
ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.
(B)
States without issuers in program
(C)
Agreement
(i)
In general
The Secretary shall require any person receiving a loan or grant under the CO–OP program to enter into an agreement with the Secretary which requires such person to meet (and to continue to meet)—
(I)
any requirement under this section for such person to be treated as a qualified nonprofit health insurance issuer; and
(II)
any requirements contained in the agreement for such person to receive such loan or grant.
(ii)
Restrictions on use of Federal funds
The agreement shall include a requirement that no portion of the funds made available by any loan or grant under this section may be used—
(I)
for carrying on propaganda, or otherwise attempting, to influence legislation; or
(II)
for marketing.
 Nothing in this clause shall be construed to allow a person to take any action prohibited by section 501(c)(29) of title 26.
(iii)
Failure to meet requirements
If the Secretary determines that a person has failed to meet any requirement described in clause (i) or (ii) and has failed to correct such failure within a reasonable period of time of when the person first knows (or reasonably should have known) of such failure, such person shall repay to the Secretary an amount equal to the sum of—
(I)
110 percent of the aggregate amount of loans and grants received under this section; plus
(II)
interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding.
 The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer’s tax-exempt status under section 501(c)(29) of such title.
(D)
Time for awarding loans and grants
(3)
Repayment of loans and grants
(4)
Advisory board
(A)
In general
(B)
Rules relating to appointments
(i)
Standards
(ii)
Original appointments
(C)
Vacancy
(D)
Pay and reimbursement
(i)
No compensation for members of advisory board
(ii)
Travel expenses
(E)
Application of chapter 10 of title 5
(F)
Termination
(c)
Qualified nonprofit health insurance issuer
For purposes of this section—
(1)
In general
The term “qualified nonprofit health insurance issuer” means a health insurance issuer that is an organization—
(A)
that is organized under State law as a nonprofit, member corporation;
(B)
substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and
(C)
that meets the other requirements of this subsection.
(2)
Certain organizations prohibited
An organization shall not be treated as a qualified nonprofit health insurance issuer if—
(A)
the organization or a related entity (or any predecessor of either) was a health insurance issuer on July 16, 2009; or
(B)
the organization is sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.
(3)
Governance requirements
An organization shall not be treated as a qualified nonprofit health insurance issuer unless—
(A)
the governance of the organization is subject to a majority vote of its members;
(B)
its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference; and
(C)
as provided in regulations promulgated by the Secretary, the organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.
(4)
Profits inure to benefit of members
(5)
Compliance with State insurance laws
(6)
Coordination with State insurance reforms
(d)
Establishment of private purchasing council
(1)
In general
(2)
Council may not set payment rates
(3)
Continued application of antitrust laws
(A)
In general
(B)
Antitrust laws
(e)
Limitation on participation
(f)
Limitations on Secretary
(1)
In general
The Secretary shall not—
(A)
participate in any negotiations between 1 or more qualified nonprofit health insurance issuers (or a private purchasing council established under subsection (d)) and any health care facilities or providers, including any drug manufacturer, pharmacy, or hospital; and
(B)
establish or maintain a price structure for reimbursement of any health benefits covered by such issuers.
(2)
Competition
(g)
Appropriations
(h)
Omitted
(i)
GAO study and report
(1)
Study
(2)
Report
(Pub. L. 111–148, title I, § 1322, title X, § 10104(l), Mar. 23, 2010, 124 Stat. 187, 902; Pub. L. 117–286, § 4(a)(282), Dec. 27, 2022, 136 Stat. 4337.)
cite as: 42 USC 18042