Consumer Operated and Oriented Plans (CO-OPs)






New Option Made Available Through Affordable Health Care Act

Consumer Operated and Oriented Plans (CO-OPs) were established by the Patient Protection and Affordable Care Act (PPACA or ACA), Section 1322, to foster the creation of new consumer-governed, nonprofit health insurers whose boards of directors are made up of the customers of the CO-OP. The goal of the ACA and the federal government is to establish at least one CO-OP in each state to provide an alternative to traditional health insurers, offering quality, affordable, consumer-owned and operated health plans.

The Department of Human Services (HHS) and the Centers for Medicare and Medicaid (CMS) are responsible for federal oversight of CO-OPs, particularly the management of a $3.4 billion loan program set aside to provide start-up and solvency capital to nonprofit organizations seeking to establish a cooperative insurance plan. Through October 12, 2012, 23 nonprofit organizations have been awarded over $1.820 billion in federal low-interest loans to begin CO-OPs offering coverage in 23 states. CoOportunity Health was awarded $112.6 million to establish a health insurance CO-OP for the states of Iowa and Nebraska.

Different than Health Insurance Carriers

A CO-OP is a private, non-profit organization that sells health insurance coverage and will be subject to the same rules and regulations as other health insurers. However, unlike many health insurance companies today, a CO-OP:

    • Gives its enrollees a say in their health plan. CO-OP members elect the board of directors, a majority of whom must also be enrolled in the CO-OP health plan by January 1, 2016.
    • Uses profits to benefit enrollees. CO-OPs are required to use their profits to lower premiums, pay back federal government loans, improve health benefits, improve the quality of healthcare, expand enrollment or otherwise contribute to the stability of coverage for members. It has no stockholders.
    • Educates enrollees about the plan. Because a CO-OP relies on its enrollees to help decide the direction of the plan, communication about key features of the plan will be a high priority.

More Competition, New Choices for Consumers, Small Business, and Larger Employers

It’s no secret that consumers and small businesses have long been frustrated by the lack of affordable health insurance choices. This is true across the United States, but particularly true in states like Iowa and Nebraska where one or two large health insurance carriers dominate the market, leaving little room for options or alternatives for individuals, families and smaller businesses. Larger businesses are always seeking sophisticated alternatives, too, in order to remain competitive and to offer excellent benefits to their employees. Learn more.

Federal Oversight

The CO-OP program has a one-time $3.4 billion appropriation to support loans to help set up and maintain CO-OP health insurance issuers. All CO-OP loans must be repaid with interest and loans will only be made to private, non-profit entities that demonstrate a high probability of becoming financially viable. Learn more.

State Regulation

CO-OPs will meet the same standards as all other health insurers to be licensed in the state where they offer coverage. Starting January 1, 2014, CO-OPs, like all other health insurers, will have to meet the set of standards in order to sell health plans through the new Affordable Insurance Exchanges. CoOportunity Health received a Certificate of Authority to provide health insurance from the Iowa Insurance Division on March 22, 2013. Licensing in the state of Nebraska is currently being processed. Learn more.

For more information and resources on the CO-OP program, see Helpful Links.