Consumer Operated and Oriented Plans gear up for 2014
While much attention has been paid to the role state health insurance exchanges will play in health reform, a second, quieter movement also created under the Affordable Care Act has been taking place and one that could play as significant a role in the states as the exchanges themselves - the formation of new, non-profit health insurers called Consumer Oriented and Operated Plans (CO-OPs).
At the end of August, the Centers for Medicare & Medicaid Services again tapped into the $3.8 billion earmarked for the program and granted a $161 million in loans to new CO-OP programs in Massachusetts and Tennessee. The loans will be used to help organizations fund start up costs and the cash reserves needed as required under each state's insurance regulations - and brought to 20 the number of states with CO-OPs under development.
The idea of the CO-OP program is to create a way for new, alternative health plans to become established in each state and for these low-cost plans to be offered through the state health insurance exchanges when they go live in 2014.
But if some states are waiting for the results of the presidential election to discover the fate of health reform and the health insurance exchanges, Jerry Burgess, CEO of the Community Health Alliance, which is leading the Tennessee effort, says the development of the CO-OPs will continue regardless of the election results.
"We have a signed 20-year loan commitment, just like the others, from the federal government to establish our CO-OP, that's not going to change," he said.
According to those involved in setting up these health plans, health CO-OPs will have many advantages over existing insurance options and will help fill a void among a population that has a high-rate of uninsured: self-employed individuals and employees of small businesses.
Also, as Burgess points out, the CO-OPs are not tied to their own internal systems for care coordination, claims processing and other functions. "Since we are not tied to any of these things, we can seek out the best-in-breed solutions from third party vendors that will supply us with the most benefit for the money we spend," he noted.
"We know that we will have lower administrative expenses," said Ellen Zane, board chair of Boston-based Minuteman Health's formation board. "You would think the bigger an insurer gets the more efficient they would be, but we know that is not the case."
Minuteman Health was formed by a coalition of health providers in eastern Massachusetts and comprises, Tufts Medical Center, its New England Quality Care Alliance (NEQCA) physicians network and the Mass.-based hospitals of Nashville, Tenn.-based Vanguard Health Systems.
As the founders of many CO-OPs see it, their operational model, which combines the interests of providers, the health plan and consumers will play a significant role in helping to keep premiums low.
"Our goal is to create a smart, efficient health insurance model that keeps administrative costs low," noted Eric Beyer, president and CEO of Tufts Medical Center and Floating Hospital for Children in the launch announcement of Minuteman Health. "This is a model built for the long-term success of everyone involved."
While the CO-OPs are not expected to be huge competitors to the major health insurance companies - most expect enrollment in the first 5 years to remain under 100,000 members - the model bears watching. Much of that is due to the governance structure of the CO-Ops.
"The consumers in the plan determine who is on the board," said Zane. "This is truly a consumer-oriented initiative that is meant to either provide more benefits or reduce their costs - and to do it right."
