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Consumer Operated and Oriented Plans (CO-OP)

NBCH & Coalitions Reach Out to Joint “Super” Committee In Support of CO-OP Program Funding

(September 2011)


NBCH Comments to CMS on CO-OP Proposed Rule


As you probably already know, the Affordable Care Act (ACA) calls for the establishment of the Consumer Operated and Oriented Plan (CO-OP) Program. The CO-OP Program will foster the creation of at least one, qualified nonprofit health insurance issuer in each of the 50 states and the District of Columbia, to offer competitive health plans in the individual and small group markets. ACA originally appropriated $6 billion in start-up and solvency loans to fund CO-OP development. However, that amount was reduced to $3.8 billion after Congress stripped $2.2 billion from the program during budget negotiations earlier this year.


NBCH's involvement in CO-OP development has been to convene an affinity group of our member coalitions that are interested in submitting or have already decide to submit an application to become a CO-OP. There are two coalitions that are planning to submit a CO-OP loan application: Healthcare21 (based in Knoxville, TN) and the South Carolina Business Coalition on Health (based in Greenville, SC). Jerry Burgess is leading the effort for both these coalitions. There are also 8 other coalitions from 7 other states that are seriously considering to apply for the CO-OP loans, or are partnering with another organization that is applying. There is also a nascent CO-OP association (called the National Association of State Health Cooperatives, or NASHCO) that NBCH has been working with.


NBCH has heard that the CO-OP program may be under consideration for either further cuts or elimination as part of the Super Committee's deliberations. Last week, Sharron DiMario,Director, Community Initiatives Employers Health Coalition, Inc. in Cincinnati, Ohio contacted super committee member Senator Portman’s (R-OH) district director to consider the following facts before cutting additional funding from the CO-OP program. In addition, Jerry Burges reached out to Rep. Clyburn's (D-SC) office as well. NASHCO also contacted Senator Baucus’ staff.

  • CO-OPs are not new to health care. There are established health insurance cooperatives in Washington, Wisconsin, Minnesota, and elsewhere that have a proven track record of delivering value and quality.
  • The lessons learned from the existing health insurance cooperatives have been positive for the free market. These cooperatives have not replaced other insurers, but have raised the bar on quality and transparency.
  • The CO-OP program is a consumer-governed, private market solution that will help to change the health insurance industry.
  • CO-OPs are a locally grown solution, and must play by all the same rules as other insurers.
  • The goal of the CO-OP program, which has bipartisan support, is to inject competition in markets where one or two companies dominate, and at the same time give consumers “skin in the game” to engage them in health care decision-making. In most states, a lack of real competition limits consumers’ choice in the purchase of health insurance. This program a unique opportunity to level the insurance playing field in every state for individuals and small businesses.
  • The ultimate goal of the program is cost reduction for small employers and employees, in order to spur job growth and keep people working.
  • CO-OPs will also, among other things, help the State health insurance exchanges be more competitive, and potentially be game changers because CO-OPs are required to work towards becoming an integrated delivery system model.

Finally, it is important to reiterate that the CO-OP program is a loan program, not a grant program, therefore the Government will be paid back with interest. We urge super committee members to support the CO-OP program’s funding to help create jobs, foster business innovation and create more competition in the health insurance industry.


More information about the CO-OP program is available at http://cciio.cms.gov/programs/coop/index.html.




Insurance Co-Op: A non-profit entity in which the same people who own the company are insured by the company. Cooperatives can be formed at a national, state or local level, and can include doctors, hospitals and businesses as member-owners. (Source: healthcare.gov)


CO-Ops were included in the PPACA legislation to foster the creation of non-profit, member-run health insurance companies in all 50 states and the District of Columbia to offer qualified health plans. (Appropriate $6 billion to finance the program and award loans and grants to establish CO-OPs by July 1, 2013.)


CO-OP Proposed Regulations: http://www.gpo.gov/fdsys/pkg/FR-2011-07-20/pdf/2011-18342.pdf


CO-OP Funding Opportunity Announcement: 

http://www.grants.gov/search/


CO-OP Program Resources:

Patient Protection and Affordable Care Act: Establishment of Consumer Operated and Oriented Plan Program Regulations: http://www.regulations.gov/#!documentDetail;D=HHS-OS-2011-0021-0002

July 18, 2011: HHS Issues Proposed Rules for Consumer Operated and Oriented Plans (CO-OPs): http://www.healthcare.gov/news/factsheets/coops07182011a.html

The CO-OP Advisory Board's Report, which is 72 pages, with pages 22 & 23 focused on the implementation timeline and loan/grant processes: http://cciio.cms.gov/resources/files/coop_faca_finalreport_04152011.pdf

The Center for Consumer Information and Insurance Oversight (CIIOO) provides a good CO-OP webpage which may be a helpful, thorough resource: http://cciio.cms.gov/programs/coop/index.html

The Commonwealth Fund provides interesting information/testimony on CO-OPs around the importance of their linkage to an integrated delivery system: http://www.commonwealthfund.org/Content/Newsletters/The-Commonwealth-Fund-Connection/2011/Jan/Jan-21-2011.aspx


On May 11, 2011, NBCH provided a membership webinar “NBCH Health Care Reform Webinar Series: Insurance CO-OPs." The webinar provided coalitions and purchasers an overview of co-ops, insight into HealthCare21's involvement around co-ops, and tips on how interested coalitions can get more involved.  


Webinar speakers included:

  • Jerry Burgess, CEO, HealthCare21 Business Coalition, Knoxville, TN. 
    HealthCare 21 currently is in the process of developing a CO-OP program in Tennessee. Mr. Burgess is a strong advocate of coalition-backed CO-OPs because coalitions act a as bridge builder and the voice of increased value in the health care market can play an important role in organizing a local CO-OP. This effort will require strong consumer, business and provider collaboration. If successful the CO-OP will increase the health benefit options available to individuals and employers. (More information on CO-OPs by Jerry Burgess: here)
  • Barbara Markham Smith, Associate Director, Consumer Operated and Oriented Plan Program, US Department of Health & Human Services
    Barbara provided and overview of the program and shared recommendations from the Advisory Board focused on priorities for the loan and grant award process, along with a checklist for prospective applicants. See below for more resources on the Advisory Board Report.
NBCH Coalition Members can access a recording of the webinar here.







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