CO-OPs: An endangered species?

For much of 2012, political arguments raged over the preservation or deconstruction of the Patient Protection and Affordable Care Act (PPACA). Despite all the noise, very little change actually occurred.

Then one day into 2013, a significant aspect of the law was quietly defunded.

As part of the Fiscal Cliff deal, all future funding for Consumer Operated and Oriented Plans (CO-OPs) has been eliminated. Entities that have already been awarded federal loans can continue to establish CO-OPs as planned, but all other entities will not have federal funding available to them. Some entities that were already underway on the planning process may be able to identify other sources of funding, but the path forward has become far more difficult, if not impassable.

As we outlined in an article published last week, CO-OPs are subject to the same fundamentals as any insurance entity, and they also face some unique challenges. And the recipe for success today is no different than it was last week. Those CO-OPs that did receive funding, however, are likely to face more scrutiny, as the whole idea of a CO-OP has become prematurely endangered.

The removal of federal funding probably eliminates the possibility that the CO-OP movement will spread. Here’s an (now obsolete but still interesting) excerpt from last week’s article:

Another factor is the question of how widely the CO-OP movement will spread, which will in large part determine the CO-OPs’ market clout. Will sufficiently large numbers of people be attracted to CO-OP membership? So far, there are some glaring gaps, particularly in the most heavily populated states; as of this writing, for example, no new CO-OPs have been approved in California, Texas, or Florida. In that sense, the CO-OPs are not fully meeting the policy goals of the enhanced marketplace.

Many will be watching the 24 CO-OPs that already received funding to see if the CO-OP model can, indeed, improve access while reducing costs, as was hoped for when the law was drafted.

2 thoughts on “CO-OPs: An endangered species?

  1. I am SO glad that my tax dollars will stop being pumped into fly-by-night scams that can’t survive on their own without our government killing what is left of our free market. These CO-OPS are just as bad as the similarly bogus green energy companies that sound great but only serve to enrich well-positioned Obama cronies with our money.

    Health care has been hijacked by our government to hand out free stuff to freeloaders, and the CO-OPS are just another way to steal our money so that our children and grandchildren have NOTHING left except IOUs. We can regain a little bit of hope for our future with every nasty piece of Obamacare that is abolished. Too bad more of Obamacare isn’t being abolished faster, for the damage it is doing to us every day is devastating.

    Just wait until there are no more doctors, only union nurses who at best can give us shots and treat infections. You can thank Obamacare for that. Just wait until the IPAB tells us who can have treatment and who can’t, with our old folks dying like flies as a result. You can thank Obamacare for that. Just wait until no employer can afford to hire full-time employees because they cost too much to hire. You can thank Obamacare for that.

  2. To Sunforester – the level of ignorance in your post is staggering. Couple of quick suggestions and then some discussion – remember to take your meds and turn off Fox News.

    Now for some rational discussion. Until the consumer is directly engaged in the health care cost equation there are no solutions that will have a major impact. I personally do not believe in employer sponsored health insurance. I think that each individual should purchase their own insurance – just like almost every other type of insurance – house, car, etc… The CO-OPs I thought were for those people who either did not have access to employer subsidized insurance or choose to be independent of anyone for their insurance. Once the consumer has a vested interest in the cost of their health care, health care costs will drop and quickly. Until then, the next best approach is to provide financial incentives to health plans to spend less through prevention and case management instead of the completely useless fee for service world we live in today. All these provisions were necessary under ACA because quietly clearly the industry is incapable of doing the right thing left to their own devices.

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