Can CO-OPs Be Viable?

The ACA has allocated $6B for the formation of not for profit CO-OPs to compete with health insurance companies. What are the requirements for these entities?

• Organizations qualified to participate in the CO-OP program are those that are organized under state law as nonprofit, member corporations.

• Priority will be given to plans that operate on a statewide basis, utilize integrated care models, and have significant private support.
• The governance of the organizations must be subject to a majority vote of its members and the organizations are required to operate with a strong consumer focus, but they are not consumer-owned.
• Profits must be used to lower premiums, improve benefits, or to finance programs aimed at improving the quality of care to its members.
• Any health insurance issuer that existed prior to July 16, 2009 may not qualify for the CO-OP program.
• Grant or loan recipients under the CO-OP program are restricted from using the funds for marketing activities.
• Representatives of federal, state, or local governments as well as representatives of insurance issuers that were in existence on July 16, 2009 cannot serve on cooperative boards.
• Cooperatives may establish private purchasing councils that may enter into collective purchasing arrangements for items and services. But the councils are precluded from setting payment rates for health care facilities or providers that are participating in health insurance coverage provided by the plans.
• The secretary of HHS is precluded from participating in any negotiation between cooperatives, or a purchasing council, and any health care facilities or providers including drug manufacturers, pharmacies, or hospitals. The secretary may not establish pricing structures for reimbursement of health benefits provided by the qualified health plans.

Group Health Cooperative in Seattle is a good example of a present not-for -profit cooperative. It presently serves 500,000 people.