For much of 2012, political arguments raged over the preservation or deconstruction of the Patient Protection and Affordable Care Act (PPACA). Despite all the noise, very little change actually occurred.
Then one day into 2013, a significant aspect of the law was quietly defunded.
As part of the Fiscal Cliff deal, all future funding for Consumer Operated and Oriented Plans (CO-OPs) has been eliminated. Entities that have already been awarded federal loans can continue to establish CO-OPs as planned, but all other entities will not have federal funding available to them. Some entities that were already underway on the planning process may be able to identify other sources of funding, but the path forward has become far more difficult, if not impassable.
As we outlined in an article published last week, CO-OPs are subject to the same fundamentals as any insurance entity, and they also face some unique challenges. And the recipe for success today is no different than it was last week. Those CO-OPs that did receive funding, however, are likely to face more scrutiny, as the whole idea of a CO-OP has become prematurely endangered.
The removal of federal funding probably eliminates the possibility that the CO-OP movement will spread. Here's an (now obsolete but still interesting) excerpt from last week's article:
Many will be watching the 24 CO-OPs that already received funding to see if the CO-OP model can, indeed, improve access while reducing costs, as was hoped for when the law was drafted.
Then one day into 2013, a significant aspect of the law was quietly defunded.
As part of the Fiscal Cliff deal, all future funding for Consumer Operated and Oriented Plans (CO-OPs) has been eliminated. Entities that have already been awarded federal loans can continue to establish CO-OPs as planned, but all other entities will not have federal funding available to them. Some entities that were already underway on the planning process may be able to identify other sources of funding, but the path forward has become far more difficult, if not impassable.
As we outlined in an article published last week, CO-OPs are subject to the same fundamentals as any insurance entity, and they also face some unique challenges. And the recipe for success today is no different than it was last week. Those CO-OPs that did receive funding, however, are likely to face more scrutiny, as the whole idea of a CO-OP has become prematurely endangered.
The removal of federal funding probably eliminates the possibility that the CO-OP movement will spread. Here's an (now obsolete but still interesting) excerpt from last week's article:
Another factor is the question of how widely the CO-OP movement will spread, which will in large part determine the CO-OPs' market clout. Will sufficiently large numbers of people be attracted to CO-OP membership? So far, there are some glaring gaps, particularly in the most heavily populated states; as of this writing, for example, no new CO-OPs have been approved in California, Texas, or Florida. In that sense, the CO-OPs are not fully meeting the policy goals of the enhanced marketplace.
Many will be watching the 24 CO-OPs that already received funding to see if the CO-OP model can, indeed, improve access while reducing costs, as was hoped for when the law was drafted.