Monday, August 22nd, 2011 - 7:04
Monday, August 22, 2011 - 07:56
Government officials are reporting growing interest across the country in establishing health care CO-OPs that would be an alternative to insurance exchanges.
On July 18, the U.S. Department of Health and Human Services issued standards and regulations for establishing Consumer Oriented and Operated Plans, or “CO-OPs.” CO-OPs are private, non-profit health insurers with a board made up of those who sign up for the insurance. They are designed to offer quality, affordable, consumer-friendly health plans, and compete with traditional insurance companies within both individual and small-employer Insurance Exchanges that will emerge in 2014.
Groups seeking to establish a CO-OP may now apply for a portion of the $3.8 billion in repayable loans made available under the Affordable Care Act. These loans would fund start-up and capitalization costs, but the CO-OPs must develop a plan for long-term solvency and operate without ongoing government assistance. The proposed standards reflect the recommendations of an independent advisory group with substantial input from consumers, small businesses and health care providers.
The US has a long history with co-op arrangements in other sectors of the economy. Rural electric co-ops were established in the 1930s and 1940s, and farm co-ops have been widespread, particularly in the dairy industry. These co-ops have played an important role in providing services at reasonable prices in rural areas. There is also a history of co-ops in the health care sector. The Farm Security Administration, a federal agency in that era, fostered health care co-ops, which provided health coverage to an estimated 600,000 Americans, mostly in the Mid West and in Texas. According to The New York Times' http://prescriptions.blogs.nytimes.com/2009/08/17/so-whats-a-health-insu... ">Prescriptions Blog, only two health insurance co-ops of any size have remained, but they have been quite successful—Group Health of Puget Sound in Washington State and Health Partners in the Minneapolis/St. Paul area.
Health insurance CO-OPs face a number of important hurdles. They must raise start-up funds, now made somewhat easier by the availability of federal loans. They must learn to accept and manage risk, and handle enrollment, claims administration, and other functions routinely conducted by private insurance companies. Most important, in order to compete in increasingly concentrated local health insurance markets, CO-OPs will have to put together broad networks of physicians, hospitals, and other health care providers. Competing with insurance giants like Blue Cross plans, Aetna, or United Health Group will not be easy.
That said, government officials report growing and serious interest across the nation in building these CO-OPs. Flying mostly below the radar, government pilots are conducting some successful missions to develop partnerships with the private sector. Don’t be surprised if this previously neglected area of health reform emerges in another year or two as a viable competitor for the consumers’ dollar in a number of regions around the country.