New report sheds doubt on success of healthcare law’s CO-OPs

{mosads}The report highlights several hurdles facing the member-governed plans:

• High start-up costs; 

• Requirement that members make up a majority of the governing board, which puts enrollees in charge of making decisions affecting plan costs;

• Building a network of providers;

• Building enrollment, which is made harder by the ban on using federal start-up loans for marketing; and

• The danger of adverse selection.

Champions such as Sen. Kent Conrad (D-N.D.) envisioned co-ops as transforming the insurance market, the report concludes, but “whether they are able to do so will depend on their ability to move beyond the individual and small group markets, work collaboratively with each other, and evolve beyond reliance on existing administrative organizations and provider networks.”

The Department of Health and Human Services recently proposed rules for the loan program and announced funding opportunities for CO-OPs.