Q: What are Consumer Operated and Oriented Plans (CO-OPs)? How are they different from plans in the health insurance exchanges?
A: The Affordable Care Act (ACA) created a new type of non-profit health insurer, called a Consumer Operated and Oriented Plan (CO-OP). These insurers are run by their customers through a cooperative model. CO-OPs offer health insurance options to individuals and small businesses via the ACA exchanges and directly from the CO-OP.
These plans were initially established in 24 states through low-interest loans funded by the ACA, but the vast majority of the CO-OPs failed in their first few years of operation. As of 2017, only four CO-OPs were slated to offer coverage to consumers in five states for 2018.
The other CO-OPs failed for a variety of reasons. Some set prices too low in 2014, many fell victim to the defunding of the ACA’s risk corridor program, and others were hamstrung by much higher-than-anticipated bills from the risk adjustment program, which inadvertently benefitted larger, more established carriers.