Why Are Many CO-OPs Failing?

In addition to instituting sweeping reforms designed to improve consumers’ access to affordable, comprehensive health insurance, the Affordable Care Act (ACA) created the Consumer Operated and Oriented Plan (CO-OP) Program to give consumers the option to choose a nonprofit insurer with a strong consumer focus. Of 23 CO-OPs launched, all but two have fallen short of their enrollment or profitability projections. Twelve plans have or are about to shut down, and two more have capped enrollment for 2016. The experiences of these fledgling companies reveal the many factors that limit market competition. We examined plan, pricing, and enrollment data for six CO-OPs located in Iowa and Nebraska (IA/NE), Kentucky, Maine, Maryland, Montana, and Tennessee. We supplemented this review with structured interviews of senior CO-OP executives and other experts to gain insights on the market assumptions and strategies of these new companies.