Every initiative in the Affordable Care Act has its detractors, but Consumer-Operated and Oriented Plans arguably receive the broadest disdain. The startup loans the Department of Health and Human Services awarded in 2012 felt a bit like money thrown away because many CO-OP sponsors were unknown entities. Loosely modeled on successful CO-OPs like Group Health Cooperative, which has 600,000 members in Washington and Idaho, the plans were meant to boost competition and give consumers a new choice in state health insurance markets.
The easy bet was that CO-OPs would meet a swift demise, but as exchanges get close to reality, so do CO-OPs. With only a few months until exchangeplan marketing begins, some CO-OPs are coming into the light. The January federal budget deal eliminated future CO-OP funding, so only 24 states will have the nonprofit plans. Some CO-OPs have made moves that could provide long-term prosperity.
One of them is the Colorado Consumers CO-OP, which landed a big partner for administrative and value-based benefit services: SeeChange Health, a California-based plan that only sells value-based benefit designs. Convened by the Rocky Mountain Farmers Union, the CO-OP could bring VBBD to small-group plans and lower medical utilization through patient management and drug adherence. While commercial plans cannot run CO-OPs, the partnership should improve the Colorado CO-OP's chances to compete.
Colorado picked a Kaiser HMO which has a $1,200 deductible and relatively restrictive drug coverage, as its small-group benchmark, , so insurer exchange participation should be high. The CO-OP will need a niche like VBBD to stand out, and a partnership with SeeChange adds that edge.
CO-OPs in other states start from a strong foundation with the population their exchange will serve. In Nevada, the Hospitality Health CO-OP is sponsored by the Culinary Health Fund, a Taft-Hartley plan administering benefits for 120,000 Las Vegas union employees, and the Health Services Coalition. The Health Services Coalition successfully lobbied Las Vegas-area hospitals into reporting quality measures.
Moreover, the Culinary Health Fund's administers benefits for lower- and middle-class union employees. Those demographics will cover the bulk of uninsured Nevadans buying coverage through the Silver State Health Exchange. The health fund's experience will benefit the CO-OP when dealing with people new to insurance coverage.
These CO-OPs won?t turn into Group Health overnight. Some might struggle to stand out in a crowded health exchange market. But CO-OPs with strong, innovative founders and partners have a fighting chance to thrive in their state commercial markets.
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