The Affordable Care Act (ACA), as many of you know, is a massive piece of legislation, and contains many far-reaching provisions. One of the less well-known aspects of the ACA is the seed money to establish Consumer Operated and Oriented Plans (CO-OPs).

What are CO-OPs? Simply put, they are health plans, but with a twist. They are Non-Profit, Member-Run Health Insurers focused on individuals and small groups. These newly formed organizations are expected to operate within the State-run Health Exchanges currently being established throughout the United States. The ACA has allocated $6 Billion in loans and grants to foster creation of these organizations, an average of $120 Million for each state.

How are they different from other Health Insurers? These organizations will concentrate their efforts on, and be regulated by, the state in which they operate. No decisions will be made in Minnesota or Connecticut. Instead, these Health Plans will be local operators, with local boards who have a vested interest only in the success of the local organization.

Why should a Provider Organization be interested in promoting and sponsoring a CO-OP?

·      As Providers are no doubt aware, the purchase of Health Insurance is an oligopoly in most states. Few choices exist for most consumers. The markets for individuals and small groups have even fewer options than larger commercial entities. As an example, the top two commercial Health Plans in Virginia have a 69% market share. In the Roanoke MSA, the top two commercial Health Plans have an 80% market share.

·      The Non-Profit status of the CO-OP tends to align more closely with the value systems of many individuals and organizations that operate to deliver health care. A specific example of the advantages Non-Profit status brings is the reduction in pressure to bring ever-higher earnings to Wall Street. Medical Expenditure Ratios for Non-Profit Commercial Health Plan tend to be materially higher than their For-Profit counterparts. The focus will be on maintaining solvency, not maintaining the value of stock options.

·      The local emphasis of these organizations provides a greater opportunity to focus on the development of close, collaborative relationships instead of the winner take all approach often apparent in the negotiation between yourself and most Health Insurers.

·      The consumer orientation of these organizations generates further positive alignment with the goals of patient-centric systems such as Medical Homes or Accountable Care Organizations.

·      Early, initial support to foster the creation of the organizations allows a provider to be a positive sphere of influence in their development, such as location of the organization, initial service area, etc.