CO-OPs a Health Plan Alternative

It looks like health insurers will have some competition for customers when affordable insurance exchanges open for business in July 2014. On Monday the Department of Health and Human Services announced a proposed rules governing the creation of consumer-operated and- oriented plans, or CO-OPs.

CO-OPs will offer healthcare coverage to individuals through the AIE and to small businesses through the small business health option programs or SHOP exchanges. The private, non-profit, member-governed health plans are designed to create another consumer option for cost-effective healthcare insurance.

The proposed rules set four requirements for a CO-OP: It must

1. Be non-profit,
2. Use an integrated care model,
3. Be member-run, and
4. Be approved by the state insurance department

“CO-OPS will look like a regular insurance company. They’ll take risk, make reimbursements and process claims,” explained Courtney R. White, a principal and consulting actuary in the Atlanta office of Milliman Inc., who authored a brief about CO-OPS.

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Interest has been slow on the uptake but is catching on. White suspects that as presented in the Affordable Care Act, CO-OPs may not have looked very sophisticated, but with the ACO movement and integrated delivery systems in place “there is a structure to them; they aren’t just thrown together.”