At the end of July, Colorado Health OP, the first Colorado’s health insurance CO-OP plan got a $69 million loan from HHS as part of a push by the ACA to develop consumer-owned-and-operated health insurance plans (“CO-OP” is short for Consumer Oriented and Operated Plans). The CO-OP is sponsored by Rocky Mountain Farmers Union and the bulk of the loan from HHS will be put in reserve to fund claims expenses for initial enrollees. As premium dollars are collected, the loan will be paid back to HHS.
The new CO-OP being created with the loan money will be especially focused on rural areas of Colorado – which are generally underserved in terms of health insurance options. In addition, residents in rural areas are often already familiar with the concept of co-ops for other services like utilities. So a Colorado health insurance plan that is owned and operated by its members should be an especially good fit.
The CO-OP will begin marketing plans next fall with policy effective dates starting January 1, 2014, and is hoping to enroll 10,000 Colorado residents in its first year. Unlike most commercial health insurance plans available in Colorado, the CO-OP will be able to direct profits back into the plan in the form of lower premiums and/or higher quality service rather than sending profits to shareholders. And while most health insurance carriers that do business in Colorado are multi-state organizations, the CO-OP will be a local plan based here in Colorado (Rocky Mountain Health Plans is another example of a local, non-profit health insurance option for people in Colorado).
The CO-OP expects to be available both through Connect for Health Colorado (aka “the exchange”) and also via independent health insurance brokers and agents. An innovative new health insurance product – especially one that strives to serve populations that are underserved by our current health insurance industry – is good news for Colorado, as it should foster more competition among the existing health insurance carriers in the market. Congratulations to Rocky Mountain Farmers Union for the approval from HHS for the loan to get the CO-OP going!