Health Co-Ops Face Uncertain Future

As part of the affordable care act (ACA) an estimated $6 billion in federal grants and loans will be allocated to form health insurance cooperatives, but some question if they are a viable alternative to traditional healthcare plans. The idea to include health insurance co-ops in ACA legislation was initially proposed in Congress in June 2009 to offset congressional opposition to a government-run healthcare system.

The Consumer-Owned and Oriented Plan, as titled in the ACA provision, calls for the creation of not-for-profit health insurance cooperatives that are consumer -owned and consumer-run. Health insurance co-ops are health payment structures with the goal of providing health insurance at reduced costs, while continuing to compete with private insurers. Consumers forming a co-op would contract and negotiate directly with providers in order to get the best value for their consumer owners. According to officials, the co-ops would be self-governed by an elected board, but would operate within the health reform exhchange, another aspect of the ACA.

Members would determine premiums, benefits covered, deductibles and co-pays, and with a non-profit status, surpluses would be returned to members in the form of reduced premiums and enchanced benefits. Like all not-for-profit organizations, co-ops would be exempt from federal taxation.

According to the ACA provision, incentives will be given by the government until each co-op has enough premium revenues to continue operating on its own.