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New report sheds doubt on success of healthcare law’s CO-OPs
The healthcare reform law’s nonprofit health insurance CO-OPs face an uphill battle recruiting enrollees and building provider networks, according to a new report from the Robert Wood Johnson Foundation.
The Consumer Operated and Oriented Plans were created as an alternative to a public option, which insurers and providers opposed because of the government’s power to offer low rates. The law sets aside $3.8 billion for loans to create the co-ops.
“Restrictions in the legislation will make it difficult for CO-OPs to achieve the negotiating power with providers and economies of scale needed to compete on price and be able to grow,” the foundation warns in its report.
• High start-up costs;
• Requirement that members make up a majority of the governing board, which puts enrollees in charge of making decisions affecting plan costs;
• Building a network of providers;
• Building enrollment, which is made harder by the ban on using federal start-up loans for marketing; and
• The danger of adverse selection.
Champions such as Sen. Kent Conrad (D-N.D.) envisioned co-ops as transforming the insurance market, the report concludes, but “whether they are able to do so will depend on their ability to move beyond the individual and small group markets, work collaboratively with each other, and evolve beyond reliance on existing administrative organizations and provider networks.”
The Department of Health and Human Services recently proposed rules for the loan program and announced funding opportunities for CO-OPs.
