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Colorado, Iowa illustrate rapid rise and fall of CO-OPs

Consumer operated and oriented plans need innovation--but also financial stability

In a very consumer-oriented health insurance industry, innovation is increasingly what sets apart insurers--and states.

Case in point: Consumer operated and oriented plans (CO-OPs). These nonprofit organizations have had their fair share of ups and downs.  

Iowa's CoOportunity Health, for example, enrolled more than 35,000 members by Jan. 1, far surpassing its first-year target of 12,000 members, and earned $127 million dollars in premium volume. Despite this enrollment success, the state's CO-OP will no longer offer plans on Iowa's Marketplace Choice Plan.

"We were up to 113,000 members on Healthcare.gov, but in the middle of December, we were put into rehab," Dana McNeill, vice president of corporate communications and stakeholder engagement, told FierceHealthPayer. "We had to stabilize the finances of the company."

The decision should not negatively impact the state's residents. "The program already has mechanisms in place that allow for Iowans to continue to be served under Iowa's Medicaid expansion waiver program," Angel Robinson, a consumer advocate with the Iowa Insurance Division, told Employee Benefits News, as previously reported by FierceHealthPayer.

Understand the marketplace

Then there's the Colorado HealthOP. Last year, the CO-OP enrolled 14,000 members, primarily by undercutting the lowest prices for plans sold on the state's health insurance exchange. And the CO-OP has lowered its exchange plan premiums by an average of 10 percent for the second enrollment period.

So, what attributed to HealthOP's success?

"We had a multi-faceted grassroots outreach campaign. We wanted to really understand the marketplace and all the different individuals involved, from navigators to members," HealthOP CEO Julia Hutchins told FierceHealthPayer. "All in all, consumers are hungry for something different, and we offer something different from what's out there."

While CO-OPs have the advantage of being new, some challenges remain--namely, federal funding.

Because HealthOP was unable to use the small amount of federal dollars it received to get off the ground for marketing purposes, the CO-OP had to get creative. HealthOP established partnerships in various rural and urban areas to hold conversations about choosing plans. "For us, our biggest question was, 'How do we get people to sign up?' We made sure to have navigators there to answer questions consumers may have," Hutchins said.

Focus on relationships

Since it's possible that the fate of CO-OPs may indicate the larger success of the Affordable Care Act, organizations must understand that relationships are key to a CO-OP's long-lasting success. Whether it's relationships with the community or relationships with providers, it's important to reflect the environment you serve, added Hutchins.

"We are a CO-OP. That's what makes us different," Hutchins said. "We are member-influenced, run by our members and the interest of our consumers. We found success because of how we run, and our overall mission to decrease the number of uninsured and reduce the cost of their health insurance."

Related Articles:
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Big insurers fear that CO-OPs have unfair competitive advantage in market
Start up, CO-OP insurers are expanding into new markets
Iowa's CO-OP pulls out of marketplace despite first-year success