Healthcare CO-OP (Consumer Operated and Oriented Plan)

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A Consumer Operated and Oriented Plan (CO-OP), commonly referred to as a co-op, is a nonprofit health insurance organization in which insured members also serve on the controlling board. Under the Affordable Care Act, co-ops could be established at a national, state, or local level with federal loans. Twenty-three co-ops were ultimately established under the law; as of October 31, 2017, four remained in operation.

Overview

Co-ops were created by the Affordable Care Act as nonprofit organizations that are controlled by and insure the same people. The law mandated that no representative from an insurance company or association could serve on the co-op boards. Co-ops offer insurance plans on the health insurance exchanges, and may be established at the national, state, or local level. Profits are directed back into the company.

Closures

The co-ops received start-up funding through low-interest government loans and through risk corridor payments, which are payments from other insurance companies that were making too high of a profit. By November 2015, 12 of the 23 co-ops created under the law had closed . The closed co-ops had received over $1 billion in government loans and subsidies. Individuals who had purchased insurance through these co-ops lost their coverage and had to choose new plans through the health insurance exchanges. Of the remaining co-ops, only one set up in Maine was operating with a positive net income in 2015, thus raising the possibility that more co-ops would continue to fail.

A study by the American Enterprise Institute posited a number of reasons for the co-op closures:

• The co-ops did not know how to price their premiums because of their lack of connection to the insurance industry.
• They priced premiums so low that they did not cover medical costs (before its failure, the Kentucky co-op had a medical loss ratio (MLR) of 158 percent, meaning that for every dollar of premiums it collected, it spent $1.58 on healthcare costs—a net loss for the company).
• Since they were new, they did not have established networks of physicians and facilities, and had to pay to lease networks from other insurance companies, driving up their costs.
• The money available through temporary risk corridors was less than expected, because most insurance companies were not successful enough to pay into the risk corridor pool.

On June 30, 2016, the CMS released information on who would owe money and who would receive money through the risk adjustment program for the 2015 plan year. Nine of the 10 remaining co-ops owed money to the program. While some of the co-ops had begun to achieve profitability in the first quarter of 2016, the announcement caused their governing boards and state regulators to reassess their financial positions. Four more co-ops began the process of shutting down as a result of payments owed through risk adjustment, since their ability to pay out medical claims was now jeopardized. As of October 31, 2017, four co-ops remained in operation.

Status of co-ops as of October 31, 2017
State	Co-op	Status	Loan amount
Arizona	Meritus Health Partners	Closed	$93,313,233
Colorado	Colorado HealthOP	Closed	$72,335,129
Connecticut	HealthyCT	Closed	$127,980,768
Illinois	Land of Lincoln Health	Closed	$160,154,812
Iowa/Nebraska	CoOportunity Health	Closed	$145,312,100
Kentucky	Kentucky Health Care Cooperative	Closed	$146,494,772
Louisiana	Louisiana Health Cooperative Inc.	Closed	$65,790,660
Maine	Community Health Options	Operational	$132,316,124
Maryland	Evergreen Health Cooperative Inc.	Closing	$65,450,900
Massachusetts/New Hampshire	Minuteman Health Inc.	Closing	$156,442,995
Michigan	Consumers Mutual Insurance of Michigan	Closed	$71,534,300
Montana/Idaho	Mountain Health Cooperative	Operational	$85,019,688
Nevada	Nevada Health Cooperative	Closed	$65,925,396
New Jersey	Health Republic Insurance of New Jersey	Closing	$109,074,550
New Mexico	New Mexico Health Connections	Operational	$77,317,782
New York	Health Republic Insurance of New York	Closed	$265,133,000
Ohio	InHealth Mutual	Closing	$129,225,604
Oregon	Health Republic Insurance of Oregon	Closed	$60,648,505
Oregon	Oregon Health CO-OP	Closed	$56,656,900
South Carolina	Consumer's Choice Health Insurance Company	Closed	$87,578,208
Tennessee	Community Health Alliance	Closed	$73,306,700
Utah	Arches Mutual Insurance Company	Closed	$89,650,303
Wisconsin	Common Ground Healthcare Cooperative	Operational	$107,739,354
*Note: Evergreen Health is transitioning to for-profit status in 2017 and will no longer be a co-op. Sources: HealthInsurance.org, "CO-OP health plans: patients' interests first" Centers for Medicare and Medicaid Services, "Loan Program Helps Support Customer-Driven Non-Profit Health Insurers"

See also

• Obamacare overview
• History of healthcare policy in the United States
• Health maintenance organization

External links

• Healthcare.gov glossary
• National Alliance of State Health CO-OPs