To create a cooperative health insurance pool that is member-owned, operated, and democratically controlled. To expand coverage for the uninsured and under-insured, provide access to affordable, high quality health care within a coordinated care practice system that improves the health of its members and the community.

Governance structure

UHCAN-MN, which is offering Co-op Care, intends to incorporate as a nonprofit, cooperative, legal entity, 501C(29). Incorporating as a nonprofit means no pecuniary gain goes to co-op members, yet can be used to lower premiums, increase benefits, improve care, maintain financial stability, and would allow tax-exempt status. A cooperative governance structure would safeguard member-owned and operated, democratic control. Governance of the CO-OP and oversight of the management would be vested in the Board of Directors of whom must be elected by ballot by the co-op membership from their own number. Please click on Optional Project Narrative File for further information on Co-op governance structure and bylaws Co-op Care.

Operational Strategy

Day-to-day operations consist of developing four departments Marketing and Outreach, Provider and Medical Management, Member Accounts and Administration, and Financial Services. The four departments and duties within each are listed in the following Table.

Summary of Operations

1. Marketing & Outreach Dept

  • Market research
  • Plan/product design
  • Marketing campaigns/sales
  • Advertising and public relations
  • Rating and underwriting

2. Provider Network & Medical Management Dept

  • Provider network & contracting
  • Provider& program quality administration & reporting
  • Medical management
  • Pharmacy management

3. Member Accounts & Administration

  • Enrollment & billing
  • Claims & encounter administration
  • Information technology
  • Customer service
  • Member communications
  • Fraud controls

4. Financial Services

  • Finance and accounting
  • Actuarial
  • Risk management
  • Legal, compliance
  • Governance
  • Investment services

Source; Developed by Solucia Consulting, consistent with the Sherlock Company s functional mapping

Staffing needs derive from the departments, duties, and scale of operations (enrollment volume and provider network capacity). See Budget Narrative in business plan for specific job positions and descriptions.

The General Manager will direct daily operations (planning, organizing, directing, coordinating) of the four departments subject to the direction and approval of the Board of Directors. See By laws for further explanation of general manager responsibilities. Also see, What the Co-op manager does (USDA Cooperative Info Report 16, 1993).

Each department, in turn, reports to the general manager through regular employee meetings. Departmental employees will have a participatory voice and major input in: formulating the general managers decision-making and in short-range tactical planning, and working with the GM and Board on long range and strategic planning. The employees make the cooperative work for members and must understand the business they work for. Members will be apprised of operations through monthly newsletter.

Administrative strategy:

To create a self-insured, single risk pool to streamline health care administration by centralizing the source of payment for all covered services under a single pool with uniform coverage and payment rules. This macromanagement strategy, rather than the current managed care micromanagement approach will save costs and integrate and coordinate care. One pool spreads financial risk across all members, creates economies and efficiencies of scale, improves purchasing power, reduces complexity of policies and enrollment, and allows simple adjusted community premium rating. Self-insure to allow direct contracting with clinics and hospitals, minimize billing and claims processing through global budgets, integrate and coordinate care and reconstitute the patient-practitioner relationship. Internal development of information technology and services, reasonable wages, no excessive salaries, one standardized benefit plan offered, uniformity of out-of-pocket payment systems (1 coinsurance plan only, no copays), and PPACA elimination of yearly and lifetime out-of-pocket maximums further streamlines administration.We are fully prepared and budgeted to rent Administrative Services Only contracts (Third Party Administrators) for claims processing, yet we can build our own provider networks, and conduct in-house accounting, reporting, and actuarial work. Any necessary auditing or certifications,particularly if statutory, will be hired on a consultant basis. Our Board will include counsel, and others with such regulatory, legal, and financial skills.

Financial Strategy:

The initial build-up of the Co-op Care infrastructure, will derive from start-up costs, i.e. preoperational costs until the day operations begin Jan 1, 2014, and depends on loans, grants, investors, with particular emphasis on gratis skillful development work particularly from professionals in health economics, insurance, finance, and cooperatives, the resources and skills of which we have. The federal funding loan would be helpful, especially given historically low ten-year Treasury securities under current federal reserve monetary policy.

Co-op Care Project Narrative

When Co-op Care becomes operational on Oct 1, 2013, Co-op financing would derive primarily from premium collections mainly via paycheck or credit card deduction (electronic funds transfer). Premiums are deposited into a bank account, Associated Bank. 17% of the total premiums are funds held for claims incurred but not reimbursed (IBNR) and are thus, deposited into a reserve account. This 17% of each year s incurred claims is approximately two months of paid claims, which is consistent with current industry experience. These funds are available for investing at the short-term cash equivalent rate. The longer-term investment rate (bond rate) Investment income would consist of bonds, and interest-bearing from the reserve account. Our nonprofit status would allow us to obtain further capital from the sale of tax-exempt state bonds and donations including grants, loans, financial backers, and bequests.

Enrollment Strategy:

To move market share. Attempt to quickly enroll 28,000 in the first year when the land rush ensues as the MN State Health Insurance Exchange opens. 20,000 membership size is considered sufficient for financial and operational stability. Enroll 20,000 per year over the ten year projection from 2014-2023 to reach about 5% of Minnesota s 4 million person private insurance market or 200,000 members. At 5% can negotiate and leverage better budget rates with providers, greater efficiencies and cost savings. See Business Plan section D. for further details.

Plan for Assembling Provider Network:

Overall plan is to form networks with the remaining independent and federally qualified/subsidized clinics, and independent or small chain hospitals, pharmacies etc in an attempt to integrate the health care system which is otherwise highly consolidated. Currently, HMOs and hospitals are aggressively vying to buy-up medical and other clinic systems. Start in the Twin Cities seven county area, then regional or statewide expansion to the 73 Rural Health Clinics (also federally qualified/subsidized), and 6 to 8 integrated large delivery systems which tend to not be owned by or fully integrated with a hospital, in outstate MN. See Business Plan section B. Provider Arrangements, Target Market and Products, for further details.

Plan to transform formation Board of Directors into operational B of D.

Election of the operational B of D. will take place within the first year after enrollment begins. Co-op Care s bylaws address the Board of Directors elections process including creating a nominating committee and nominating procedures to ensure that consumer members of the organization have a choice of candidates for the board, and provide an opportunity for a change in directors. A majority of the voting directors must be members of the organization, yet reserving positions for directors who have certain types of expertise that are essential to the governance of the organization, such as providers or individuals with experience in health caredelivery, operations or finance. Each director must meet ethical, conflict-of-interest, and disclosure standards protecting against insurance industry involvement and interference.

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Co-op Care: A Prairie HEALTH Companion proposes to be Minnesota’s first large-scale, non-profit, cooperative health insurance pool for individuals, uninsured, co-ops, small businesses, and non-profits. Unlike profit-driven HMOs, our goal is to serve people based on need, and improve the health of our members and the community.

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