In July the Department of Health and Human Services announced proposed rules to regulate the creation of consumer-operated and -oriented plans, or CO-OPs. With the October 17th application deadline fast approaching it seems like good time to take another look at CO-OPs to assess their likelihood of success.
CO-OPs are designed to be non-profit, member-governed health plans that create another consumer option for cost-effective healthcare insurance.
When the program was first announced, Courtney White, a principal and consulting actuary in the Atlanta office of Milliman Inc., explained in an interview with HealthLeaders Media that "CO-OPs will look like a regular insurance company. They'll take risk, make reimbursements and process claims."
He identified accountable care organizations, integrated delivery systems and chambers of commerce as likely candidates to form CO-OPs.
HHS will kick-start the CO-OPs process with $3.8 billion in loans, or about $100,000 per applicant to help fund feasibility studies and business plans.
Analyst Bradford Gray, Ph.D., wonders if that will be enough to guarantee the success of this latest option to individual and small business healthcare coverage. Gray, a senior fellow at the Washington, D.C.-based Urban Institute, a nonpartisan policy research organization, explained that "CO-OPs may become important insurance options in some markets, but it is difficult to foresee their having a transformative effect that was expected of the public option."