I posted something on co-ops in Obamacare a couple of years back and many commenters were…skeptical, but I thought I’d update anyway:
Consumer Operated and Oriented Plans (CO-OPs)
The Affordable Care Act creates a new type of non-profit health insurer, called a Consumer Operated and Oriented Plan (CO-OP). These insurers are run by their customers. CO-OPs are meant to offer consumer-friendly, affordable health insurance options to individuals and small businesses.
The federal government is offering loans to non-profit organizations to help establish CO-OPs.
What This Means for You
By January 1, 2014, you may have the opportunity to buy health insurance coverage from a CO-OP for yourself or your family. If you’re a small business owner, you may be able to buy health coverage for your employees from a CO-OP.
In a CO-OP, your health insurance needs and concerns are a top priority because you and your fellow CO-OP customer/members elect the board of directors. A majority of these directors must themselves be CO-OP customers. CO-OPs must use profits to lower premiums, improve benefits, or improve the quality of members’ health care.
Seems the co-op idea is still an iffy proposition (we’ve tried this before) but they are moving forward with them:
Seven organizations will receive a total of $639 million in federal low-interest loans to launch new, consumer-governed health insurance plans in eight states, the federal government announced Tuesday.
The new plans, authorized by the 2010 health law, are scheduled to open for business in 2014. They will be available on the new state health exchanges, or marketplaces, mandated by the law, and primarily will serve Americans under age 65 in the individual and small-group insurance markets. More loan recipients will be announced in coming months, with the goal of launching at least one nonprofit co-op plan in every state, according to the Centers for Medicare & Medicaid Services, which administers the program.
The seven loan recipients are Freelancers CO-OP of New Jersey, New Mexico Health Connections, Midwest Members Health in Iowa and Nebraska, Common Ground Healthcare Cooperative in Wisconsin, Freelancers CO-OP of Oregon, Montana Health Cooperative, and Freelancers Health Service Corporation in New York
The new plans are being formed by public health activists, medical associations, business groups, hospital executives, labor unions and others. They’re betting that Americans want a local, consumer-friendly alternative to commercial insurers.
“People from all walks of life are dissatisfied with the status quo, and believe that our health care and health insurance system can be dramatically improved,” said John Morrison, a former Montana insurance commissioner who is on the board of the proposed Montana Health Cooperative and also heads the National Alliance of State Health Cooperatives.
The plans are being started under the health law’s Consumer Operated and Oriented Plan (CO-OP) program. The aim is to increase competition among insurers, potentially reducing premiums and improving health care quality and customer service. In many states, only one or two insurers control the bulk of the health insurance business.
Some co-op sponsors say their plans will be able to offer lower premiums because they won’t have to generate profits for investors. Under the law, co-op plans must apply any surpluses to lowering rates or improving benefits or quality for their members.
As an individual or small business owner, you may be able to join others in creating a CO-OP and apply for a federal loan to help get it started.
Someone here at BJ should start one. I draft Martin.
Gin & Tonic
That’s about $90 million each. What’s “small” about that?
kay
@Gin & Tonic:
I think it’s just in comparison to the goal, which is at least one in each state.
trollhattan
How do these co-ops compare to existing co-ops, like Washington’s Group Health Cooperative? Completely different beast?
arguingwithsignposts
Way to throw martin under the bus!
kay
@arguingwithsignposts:
Why? It’s a wonderful opportunity :)
butler
@Gin & Tonic:
Aetna’s 2009 revenue: $34.8 Billion.
Hell, their profit alone was 1.9 Billion, or more than 20 Co-ops at 90 million a pop.
PurpleGirl
@trollhattan: I would imagine that they might look to the Washington group for a model of how to operate. There once were many non-profit health plans but when the for-profits really began to make money, many of the non-profits had their charters changed and became for-profit — think about the Bues. So many executives and Boards of Directors looked at the profits and decided they wanted to share the bounty, clients be damned.
Gin & Tonic
@butler: Sure, I know that, but when I think of a small company I don’t think of $100 million.
negative 1
They can throw out as many neat-o acronyms as they want, but at the end of the day all available evidence has been that they are mutual insurance companies. Straight up. Are they better than for-profits? Arguably. But mutuals have existed for years in the same waters as the for-profits, and if they are the tremendous savings that they are supposed to be why are there still for-profits? To the end consumer there isn’t really going to be a huge difference.
As the person in charge of benefits for the union that I work for I can tell you that the so-called ‘cadillac’ plan will be $30,000 a year for a family in 2 years in my state. And what luxurious benefits are they? Probably the same health insurance anyone else had 25 years ago. $10 copays, $10 prescription copays, $6K out of network cap, etc. Because we didn’t just rake over the membership and cave to crappier coverage, that’s what we pay. The new healthcare bill has made it so that more people will be insured, which is great, but not really cheaper or getting cheaper on the horizon. The ugly truth is that it’s much more complicated than profit margins for insurance companies. Doctor’s fees aren’t helping, they point to malpractice insurance and the horrific cost of a medical degree and the list goes on and on. Want to put the free market to work? Pass single payer and tell them all to figure out how to make a profit on their own. I’ll guarantee you they’ll end up fine.
TK-421
I don’t fully understand the dynamics of the health care finance industry in the US, but it seems to me that a large group of motivated, (relatively) educated, and young (and therefore relatively) healthy pool of potential members exists for one of these CO-OPs.
It seems to me that the Occupy movement would be a good place to build one of these. The Occupy movement might (should?) be interested in starting one of these for its membership. But again, I’m probably missing something because I don’t fully understand the business dynamics of health care financing in the US.
PurpleGirl
@negative 1:
A number of the former non-profit insurance companies (health or otherwise) were bought out by their executives and had the states change their charters to become FOR-PROFIT. It wasn’t that they didn’t make decent money to pay their executives decent salaries but the boards of directors and senior executives decided they wanted to make EVEN MORE Money just like the for-profits. Research what were the Blue Cross-Blue Shield plans — they became for-profit. Look at the company now called AXA, which was The Equitable (a mutual company). (While is wasn’t a heath insurer, it was a major financial mutual and it became a for-profit.) The people who ran these companies got greedy.
Martin
Sweet. I’m a little busy, though. Ok, more than a little busy – crazy insane busy.
Co-ops really need to serve geographically close populations. You just can’t negotiate services over broad distances for small populations. But if you can get a bunch of people in a town, you can pretty easily negotiate with the local doctors group, the local pharmacies, and so on. Places like the resort areas of Colorado where there are a ton of self-employed and seasonal workers in relatively tight pockets would work pretty well.
JoyfulA
A freelancers’ group in New York has been running their own health insurance plan for a couple of years, and apparently it’s working.
In Pennsylvania, the Blues are still nonprofit and still offer decent, affordable health insurance, although the premiums are going up and up.
All the old mutual life insurance companies went corporate about 15 years ago, including the one I used to work for and a different one my spouse had a policy with. I don’t know why; I assume there was a pile of money available, and the reason was greed.
Some Loser
@negative 1:
Good idea, bro. There is, however, one obstacle: getting such a legislation to pass. As it stands now, more than a few of our congressmen/women are skeptical of a single-payer system.
Replacing them with more agreeable representatives are easier said than done. It is possible, though. Maybe we need to form a large interest group.
Lakis Velotris
Athens Archbishop Christodoulos said we deserved 9/11 (ISBN 960-252-007-8). On the Thursday before Easter Greeks chant pogrom inciting Beatitudes against “godslaying lawless Jews”in Greek, but change it to “Assemby of Jews” in English. They removed American Archbishop Iakovos because he was too American and Jerusalem Patriarch Irineos because he was too friendly with Israelis. Old witches who used to work at diners until they dropped now slip “Elder Protocols” and other terror claptrap in the pews. When I was growing up priests, would bathe, shave, wear pants – Robed, bearded, stovetopped priest is terror sympathist by definition. Greece was only euronation not to vote for 1947 Israel creation. In such time of war, we should insist that any public assembly of more than ten mandatorily be only in English! These heathen necromantic iconolaters have the nerve to ban Psalm 150 organs? If the Greek government did an Enron with its own books, and Greeks Trojan Horse their Greek taxes, what makes you think they pay the IRS? They go to Greece annually to tend their undisclosed accounts on soviet Cyprus. Notice the soviet spy money laundered Metsos disappeared with Cyprus complicity? Did Illinois Giannoulias, Florida’s Crist, California’s Angelides and New York’s Gianaris apply Greek budgeting techniques like Sarbanes Oxen? Greek Ponzi fourfold Eurodefecit boasts Trojan Horse Perfidy, Klephth Brigandage. Upset that industrious Albanians invaded their lazy, gungrabbing, babykilling homeland, the soviet-churched Greeks vindictively hire, house and promote illegals. As quakes render their homes disposable, Greeks are oblivious to the very concept of maintenance. Instead of blaming environmetalists for fires and socialists for deficits, jealousy driven soviet faith seeks scapegoats. Olympia Snowjob supports Obamacare and abortion because of her gangreen patriarch (Is Orthodox Christianity progressive? Michelle Boorstein Washington Post 11-4-09 Ecumenical Patriarch Bartholomew spoke about the spiritual imperative for nonviolence, universal health care and reducing consumption to help the environment.) Ancient Greeks reduced consumption to help the environment through infanticide and sodomy. Palamite Zealotes massacred Thessalonian aristocracy in preparation for Cantacuzene usurpation via hesychast hyperventilatory hallucination. This soviet socialism motivated Anatolian farmers to embrace Turks in the 1400s to avoid redistributative taxation and then for liberated mainlanders to migrate to Smyrna in the 1800s.