Health Co-Ops are NOT Cooperatives

Some of you may have read or heard about some of the struggling government-funded non-profit insurers (created out of the Affordable Care Act) that journalists continue to incorrectly refer to as “co-ops,” short for cooperatives, rather than using the uppercase acronym  CO-OP, which stands for Consumer Operated and Oriented Plans.  While some of these non-profit insurers have incorporated elements of a cooperative business, they are not structured legally as cooperative businesses.

The issue lately has been man of these ACA non-profit health insurers (CO-OPs) have been facing growing financial difficulties and media scrutiny. Because of this, and that many people including lawmakers do not understand the cooperative business model or know anything about it, there is good potential that true cooperative businesses are lumped in with these struggling ACA non-profit health insurance businesses unfairly.  In a time when politics will take a forefront for the next year, the distinction, then, is important.

The National Cooperative Business Association (NCBA) has a recent press release that highlights these issues and distinctions, which can be found here.  If you hear or read of anyone that refers to these government-funded non-profit insurers as co-ops, it may be wise to point out the differences.

David Enquist, CPA