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Exchange Board Has Little Interest in Health Care Co-Ops

The federal government is ready to hand out $3.8 billion in loans to start up not-for-profit, member-governed health plans called consumer-operated and -oriented plans, or co-ops.

A deadline recently passed for the first round of applications, with a number of states taking up the idea, but not California.

So far, California has been pretty cool on the idea. At the August meeting of the Health Benefit Exchange board, concern was raised over what a co-op’s market share would be, and that a co-op might undermine what the exchange wants to do by dividing up its pool of participants.

“This co-op provision, it sounds awfully leftist to be included [in the Affordable Care Act],” board member Robert Ross said. “The public option got killed, but the co-op got through?”

The idea was proposed, in part, to fill a hole left by the rejection of the public option, according to Steve Barrow, director of the California State Rural Health Association.

The three states where co-ops have been implemented successfully in the past, he said — Wisconsin, Minnesota and Washington state — have large rural, agricultural areas. The idea of the co-op could possibly work in California, given its sizable agricultural areas.

“We [at CSRHA] haven’t really talked about [health] co-ops much in California,” Barrow said. “It’s not that they’re a bad idea, it’s just that no one has really pushed them at all, or been the one to take the lead on them.”

In a way, he said, they could make sense in the politically conservative agricultural areas, since people there are already so involved with agricultural cooperatives.

“Farmers are pretty independent, and generally distrust government anything,” Barrow said. “But it’s true, they’re really familiar with ag co-ops, and if it [a health co-op] were somehow part of an ag co-op, that might make more sense for them.”

The first deadline for applications was Oct. 17. The next deadline is in the middle of December.

Barrow can’t imagine anyone taking on the co-op idea until after the federal super committee makes its decisions on spending cuts later this month — since co-op loans might be one of the things on the chopping block, he said.

At that August meeting of the exchange board, consultant Lesley Cummings included information about co-ops. She said under current federal rules co-ops are automatically eligible to participate in the exchange.

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