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Illinois governor, senators back proposed health insurance co-op SimpleHx

Gov. Pat Quinn and both Illinois senators are throwing their weight behind a fledgling group that's competing against a Chicago-area hospital organization for a federal loan of more than $100 million to establish the state's first health insurance co-op under the federal healthcare law.

Mr. Quinn, fellow Democrat Richard Durbin and Republican Mark Kirk have written letters of support on behalf of SimpleHx, a co-op proposed by a group of people who met last year while pursuing their MBAs at Northwestern University. The proposal is also backed by the Small Business Advisory Council, a Chicago-based advocacy group of about 600 businesses, formed in 2010.

SimpleHx is competing against four proposals, including one backed by the Metropolitan Chicago Healthcare Council, a trade group founded in 1935 that represents more than 150 local hospitals and health care organizations.

If the proposals are similar, in terms of promises to save money and improve care, the political support could prove to be key, said Alan Sager, a Boston University health policy and management professor.

“It might tip the balance,” Mr. Sager said.

The federal health care overhaul created funding for member-run co-ops, which are intended to spark competition against the big insurance carriers and help drive down costs. But the program has led to controversy. The U.S. Department of Health and Human Services has said up to 40 percent of loans used to finance the co-ops are likely to go into default.

MCHC has requested a loan of between $100 million and $200 million, while SimpleHx is requesting a roughly $150 million loan. The loans will be awarded by the U.S. Centers for Medicare and Medicaid Services, which is limiting the number of recipients to as few as one per state.

MCHC did not seek support from elected officials, but has received more than 50 letters on behalf of its proposal from employers, community leaders and providers, said Dennis O'Sullivan, MCHC's director of government and public relations.

The board forming MCHC's co-op includes representatives from the Chicagoland Chamber of Commerce and Illinois Chamber of Commerce.

SimpleHx's proposal is also backed by two Democratic members of the Illinois congressional delegation, Jan Schakowsky and Mike Quigley, according to letters provided to Crain's.

“The fact that we were able to generate support on both sides of the aisle. . . .I think it speaks powerfully about the vision that we're trying to provide,” said Dr. Elmer Abbo, a University of Chicago assistant professor who would be the co-op's chief medical officer.

MCHC plans to initially cover an estimated 20,000 people and SimpleHx, about 25,000.

The state's health insurance exchange, set to debut in 2014, is likely to be a key feeder of consumers to the co-op. Co-ops must sell coverage on the state's exchange, and two-thirds of the policies or contracts they issue must be offered in individual and small group markets.

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