Metropolitan Chicago Healthcare Council gets nod to launch Illinois insurance co-op

The federal government will give a $160 million loan to a hospital trade organization to establish a health insurance co-op to compete against major insurance carriers in the state.

The CMS has chosen a plan sponsored by the Metropolitan Chicago Healthcare Council, an organization representing 150 hospitals and healthcare organizations in the Chicago area. MCHC will establish a member-owned organization to offer healthcare plans on the Illinois health insurance exchange, an online marketplace that lets consumers choose between health plans. Both the co-ops and the exchanges are critical components of the landmark Patient Protection and Affordable Care Act.

The plan, known as Land of Lincoln Health Inc. Co-op, calls for initially covering 20,000 people statewide, growing to 100,000 within five years.

Kevin Scanlan, MCHC's president and CEO, said the co-op will have plans in place by Oct. 1, to be offered through the state health insurance exchange. There will be open enrollment through the end of the year, and insurance coverage will begin Jan. 1, 2014. The organization will offer multiple plans, some geared toward individuals and others toward employers.

“There's not going to be one size fits all,” he said. “We've got to put plans together that look good to someone in Galena to Mount Vernon to Chicago to Macomb.”

It's an ambitious undertaking, said Dale Moyer, president at Chicago benefits consultancy Incentovate LLC. MCHC will have to show that it can do outreach, education and enrollment.

“It's going to be a lot to do in a very short time,” Mr. Moyer said. “Everyone's going to be watching very closely and optimistically: Show us what you've got.”

A CMS spokeswoman said in a statement that it made its decision based on several criteria, including the applicant's business plan, orientation toward consumers and ability to repay the loan.

The plan beat out four other contenders, including SimpleHx, which was formed by a group of former Northwestern University MBA students and endorsed by Gov. Pat Quinn and both Illinois senators. It also received backing from the Small Business Advisory Council, a Chicago organization representing about 600 businesses.

Dr. Elmer Abbo, a leader of the SimpleHx proposal and an internist at University of Chicago Medicine, also applied for the loan. He did not immediately return calls seeking comment.