The federal government is putting up $107 million in low- and no-interest loans to help start a new health insurance company in New Jersey.

Freelancers Union, a New York nonprofit, will use the money to create a "consumer-owned-and-operated plan."

The CO-OP concept is a provision of the federal Affordable Care Act.

Freelancers Union CEO Sara Horowitz says the business model for the New Jersey CO-OP will be very different than for-profit insurance firms in the Garden State. She says savings and profit will be returned to the company to keep premiums low.

"We don't have the same kind of requirements of paying back private equity and there are no shareholders who are getting rich," Horowitz said.

Freelancers Union already runs a "social-purpose" health insurance company in New York for about 23,000 independent workers. Horowitz, a MacArthur "genius grant" winner, founded the advocacy union and heads the group's New York insurance company. She's spent the last four years negotiating contracts and forging partnerships with health providers in New York.

In New Jersey, Freelancers Union hopes to enroll about 60,000 subscribers and begin offering benefits in 2014. The union's total loan award was for $340 million to operate CO-OPs in New York and Oregon as well.

Horowitz said the investment from the government is "like venture capital for health care."

She plans to hold down costs -- in part -- by sharing best practices and cost data with plan members and care providers. Horowitz says doctors in the CO-OP network will use that information to refer patients to the hospitals and specialists who can provide the best care at reasonable prices.

"So, in other words, you wouldn't be able to see just any doctor, you would have to stay with the doctors that your doctor sent you to and those would be significantly less expensive," Horowitz said.

Consolidating -- and sharing -- information

Health-care quality and costs can vary dramatically. Horowitz says insurance companies are in a good position to aggregate the experiences of all plan members to suss out the best deals and best practitioners.

As example, she says a colonoscopy can range from $500 to $3,000. One of the key cost drivers is the kind of anesthesia used, but an individual patient might have a hard time shopping for a quality procedure at a good price.

"Some of these things you cannot know unless you are the insurer," she said. "We're looking at a broad data set."

In New York, Horowitz says Freelancers Insurance Company is saving on prescription drug costs because the firm switched its business away from pharmacies that hold on to steep rebates from drug companies.

"We didn't think that was fair, we wanted to work with pharmacies that pass those savings on to customers," she said.

Freelancers Union is working with the primary care innovator Iora Health, based in Massachusetts. Company CEO Rushika Fernandopulle already has some experience transforming the way people get preventive health care in New Jersey. In one of his early projects, he helped to establish a health center in Atlantic City for casino workers. Fernandopulle says the center is a "medical home" where workers get comprehensive, proactive help managing their health and chronic illness.

As an example, Fernandopulle says, at Iora-designed health centers patients meet -- in person -- with a health coach, who's integral part of the care team, not an add on or afterthought.

Fernandopulle says doctors are paid — and work -- differently too.

"We also are able to deal with things in a lot of ways, not just by visits. By email, by video chat, by text message, a lot of groups, a lot of education to empower people," he said.