A nonprofit health insurance cooperative organized a year ago with the help of federal loans has been licensed to operate as an insurance company in New Mexico, state Insurance Superintendent John Franchini announced Tuesday.
New Mexico Health Connections plans to begin selling insurance beginning in October. The cooperative expects to sell insurance on the small-business and individual health insurance exchanges that are scheduled to become available Oct. 1, and in the commercial insurance market.
Coverage that Health Connections sells is to become effective Jan. 1, 2014.
The federal Affordable Care Act authorized establishment of consumer-directed cooperatives that were designed to increase competition among health insurers. Health Connections received a five-year, $6 million loan from the federal government to cover start-up costs and a second $64 million, 15-year loan to adequately capitalize the cooperative when it starts selling insurance.
“This is the first time the state of New Mexico has had a new health insurance carrier since 2005,” Franchini said at a news conference at the cooperative’s Albuquerque headquarters.
Asked about the adequacy of the cooperative’s reserves, Franchini compared Health Connections to New Mexico Mutual, a workers compensation insurer that was capitalized with a 15-year, $10 million loan from the state. Franchini said the loan was repaid in five years.
“I know they’ll be here,” Franchini said of Health Connections.
Health Connections CEO Martin Hickey said, “Finally, New Mexico will have an insurance company that is not being just a middle man but will be a company focused on keeping people as healthy as they can be.”
In a prepared statement, the cooperative’s board president, Nandini Pillai Kuehn said, “We will not be a big insurance company driven by profit. Rather, we were created to make sure our members have a voice and that any profits are constantly driven back into expanded benefits or lower premium costs.”