What’s required for CO-OPs to capitalize on “unique opportunity”?
Inside Health Insurance Exchanges looks at Consumer Operated and Oriented Plans (CO-OPs) in the wake of $638 million in grants from CMS to seven CO-OPs. Here is an excerpt:
Courtney White, a consulting actuary at Milliman, predicts that the majority of states — though not all — will have a CO-OP in place by 2014. He tells HEX that the start-up companies will have “a unique opportunity” to build enrollment in 2014 when a large pool of underinsured and uninsured people gain access to health coverage and federal premium assistance through state insurance exchanges. Milliman has helped more than 30 CO-OPs complete their applications to HHS…
One of the most significant challenges for CO-OPs will be in building provider networks in a relatively short time. And they’ll need to try to sign contracts that are competitive with those of the largest carriers in each state, says White. “Since contracting leverage is primarily based on volume or members and the CO-OPs do not have any yet, they will need to help the providers fully understand the vision and mission of the CO-OP,” he says. “They need to differentiate themselves from the traditional insurance carriers.”
And attracting members won’t be easy. White says CO-OPs will need “a strong marketing force that can explain their story and demonstrate the benefits of a CO-OP over a traditional insurance company.”
They’ll also need to make sure they’re ready to sell coverage by the time state exchanges begin their open-enrollment period on Oct. 1, 2013. Missing that initial wave of uninsured could be detrimental to the success of a CO-OP, says White.
And there will be hurdles in becoming licensed insurance companies or HMOs in their states. Moreover, HHS intended for the solvency loan “to be subordinated debt” on the balance sheet. That means that the state would not consider it as debt, but rather equity for the purpose of measuring solvency, White explains. “While preliminary discussions about the subordinated debt have taken place with states, these conversations need to continue to ensure proper licensing.”
The full article is available here.