Arizona, Colorado and Nevada to Offer Health Plans in State Exchanges to Spur Competitive Rates, According to HealthLeaders-InterStudy

August 8, 2012—Nashville, Tenn.—HealthLeaders-InterStudy, the leading provider of managed care market intelligence, finds that non-profit organizations in Western states including Arizona, Colorado and Nevada are leading the way in the creation of Consumer-Oriented and Operated Plans (CO-OPs). These plans, allowed under federal healthcare reform legislation, are designed as regional health insurance plans established by non-profit groups. These CO-OPs are meant to stimulate more competitive rates for health plans offered through exchanges.

The three CO-OPs being developed in Arizona, Colorado and Nevada are eligible for low-interest federal loans. These organizations cannot be sponsored by state or local governments or existing health insurers.

“If these CO-OPs work as healthcare reform legislation intends, they could pose a competitive threat to managed care organizations and place downward pressure on premiums,” said HealthLeaders-InterStudy Market Analyst Bill Melville.

Some industry insiders in Arizona, brokers in particular, are skeptical of whether CO-OPs will be a viable platform because of adverse selection. The guaranteed issue mandate prevents the CO-OP from rejecting applicants, and if the program draws a large number of people with expensive medical conditions, costs could spiral out of control. However, if the CO-OPs prove to be successful in attracting the previously uninsured members, they would represent a new sales channel for drug companies.