Consultant: CO-OP Plans Have a Chance

PPACA prohibits governments from sponsoring CO-OPs, and CO-OPs may have trouble with guarding against adverse selection and running administrative systems, Battani says.

But, on the other hand, Battani says, PPACA is imposing new limits on all plans, on and off the new health insurance distribution exchanges, that could help level the playing field and create opportunities.

The U.S. Department of Health and Human Services (HHS) is setting up PPACA-required sources of CO-OP loans, and “the availability of low-cost capital from federal sources is the single best reason for new CO-OPs to form,” Battani says. “Additional benefits include the ability to form group purchasing councils for administrative and other support, as well as the ability to offer products through the insurance exchanges in direct competition with more established competitors.”

CO-OPs will get special tax breaks, and they may be able to keep costs down by taking steps such as participating in the new collective purchasing arrangements and teaming up with respected integrated provider networks, Battani says.

“The new CO-OPs may have an advantage in forming effective business relationships with provider organizations and networks in the post-health care reform environment simply because they are not traditional commercial carriers,” Battani says.

Other Massachusetts health system change coverage from National Underwriter Life & Health:

• Massachusetts Recruits Co-Op Runners
• Consumer Reps: Navigators and Producers Can Share Exchange Business
• Researchers: Angry Brokers Slow Exchange Growth
• Bay State To Hike Penalties For Uninsured
• Massachusetts Nears Coverage Mandate Deadline