This issue brief from The Commonwealth Fund describes the opportunities and challenges facing organizations that establish Consumer Operated and Oriented Plans (CO-OPs) under the Patient Protection and Affordable Care Act (ACA). Health cooperatives differ from traditional health insurers in that they are nonprofit entities governed by their members and are focused on coordinating care and coverage for their beneficiaries. The most successful examples include HealthPartners in Minnesota, with 1.5 million members, and Group Health Cooperative in Washington State, with 700,000 members.
Under the ACA:
• A CO-OP’s primary purpose is to promote the health and well-being of its customers as affordably as possible over the long term.
• CO-OPs will be exempt from federal taxes.
• Each CO-OP must operate with a strong consumer focus, and profits must be used to further its mission through lower premiums, improved benefits, or improved quality of care.
• The federal government will distribute $3.4 billion in funding for the program in the form of loans to cover start-up costs and to meet solvency requirements in states where some CO-OPs seek to be licensed as insurers.
• The funding must be disbursed by July 1, 2013, and the Department of Health and Human Services (HHS) must disburse it in a way that ensures the establishment or operation of at least one CO-OP in each state.
• Health insurers in existence before July 16, 2009, are not eligible for funding from the CO-OP program.
Groups interested in forming a CO-OP will have to overcome start-up challenges that include earning enough money to sustain long-term operations, recruiting and retaining experienced management and staff, and obtaining funding for growth and expansion. But in addition, the CO-OP health plans must also offer coverage that is affordable and meets the unique needs of their customers in the individual and small-group markets. To do this, CO-OPs face the added challenge of working with a range of providers to develop innovative models of payment and care delivery systems.