Health insurance CO-OPs (Consumer Owned and Operated Plans) are part of the Affordable Care Act. More than 400,000 people enrolled in CO-OP plans during the first open enrollment period for Obamacare, and CO-OP managers are taking steps to increase enrollment. Their plans are the lowest-cost silver plans on the exchanges in nine states after cutting rates based on their experience in the first enrollment period, according to the National Alliance of State Health CO-OPs.
There are 23 non-profit CO-OPs in 26 states and all were started with 5-year loans from the federal government. Once the loan is repaid, the CO-OP is owned jointly by the private investors and members. All of the CO-OPs are members of NASHCO, the National Alliance of State Health CO-OPs. Their purpose is to provide health insurance to individuals and small businesses that have a hard time getting coverage, particularly in markets where a single insurer is dominant. This puts CO-OPs directly in competition with many Blues plans.
Most CO-OPs contract with providers directly and supplement with leased networks that wrap around their proprietary networks while a few lease or direct contract exclusively. This mix of leased and direct-contract networks is very similar to traditional commercial health insurers.
- Leased networks: Arches Health Plan (UT) leases the Coventry network and Colorado HealthOP leases the Cofinity network
- Combination of leased and direct contract: Consumers Mutual Insurance of Michigan (MI) combines proprietary networks with Multiplan, PHCS, and Cofinity wrappers and HealthyCT has a proprietary network with PHCS out of state wrapper.
- Direct contract: Kentucky Health Cooperative and New Mexico Health Connections
So far, CO-OPs have chosen to differentiate themselves through care management and outreach to members instead of following the narrow network trend. “Our whole strategy has been to invest heavily in medical management because at the end of the day, we can’t make money the way we used to, which is to conservatively underwrite this population,” says Martin Hickey, MD, CEO of New Mexico-based Health Connections and board chairman of the National Alliance of Health Care CO-OPs, in AIS Health Business Daily on Jan. 6, 2015. Typical hospital readmission rates for a commercial population are between 12% and 14%. Hickey says his firm’s readmission rate has held at 6.5%, and dipped to 2.5% over the last three months.
Like all businesses, CO-OPs live and die by their balance sheets. In January 2015, the Iowa Insurance Commissioner found that CoOportunity Health, an Iowa-based health insurance company, was insolvent and requested liquidation in court. Current members were notified and encouraged to enroll with different carriers prior to February 15 to ensure continuous coverage and compliance with federal law.
Are CO-OPs part of the network landscape in your state? Do you compete with them for customers and/or providers?