Co-ops and customization

Health insurance co-ops were the last vaguely plausible door prize for progressives and others who wanted a robust public option tied to either Medicare rates or at least open negoatiation by CMS with providers.  Co-ops were sacrificed at the alter of austerity in the budget showdowns as the federal start up funds and loan guarantees got whacked.  And honestly, I’m of the opinion that the tax structure of an insurer has some but not too significant influence on quality.  There are some great local non-profit insurers, and some shit-tastic local non-profits; there are some great national for profits as well as great national non-profits as well as bottom feeding scumbags that make the industry slightly less popular than Congress.  More important, in my mind has always been the structure and integration of an insurer with providers. 

However, the co-ops seem to be proving me wrong in the first year.  This is a nice little surprise.

Bangor Daily News on March 16 reported on the Maine co-op: (BTW — Bangor Daily News does excellent healthcare reporting in general)

In Maine, the insurer that has enrolled the most Affordable Care Act customers isn’t the state’s well-established Blue Cross Blue Shield plan, owned by WellPoint Inc. It’s WellPoint’s only rival: Maine Community Health Options, a startup that didn’t exist three years ago.

The newcomer, funded primarily by taxpayer money lent under the U.S. health care law, has won about 80 percent of the market so far in Maine’s new insurance exchange…

Along with Maine, co-ops have attained large market share in New York, Iowa, Nebraska, Colorado, Kentucky, Wisconsin, South Carolina, Utah, Montana, Nevada and New Mexico, said John Morrison, a board member and founding president of the co-op trade group, and other executives.

New York’s co-op, Republic Insurance of New York, which was founded by the same organization, Freelancers Union, that started Bonder’s company in Oregon, is probably the largest in the country, with more than 50,000 members….

Federal authorities have approved plans by the co-ops in Montana, Massachusetts and Kentucky to expand into neighboring states next year — Idaho, New Hampshire and West Virginia, respectively.

This is some great news.  I think the co-ops that are succeeding are succeeding because they are new entrants to the market and can craft their strategies to fit the market as it is without worrying about creating problems for other business divisions. Co-ops that only sell Exchange qualified products to individuals and small groups don’t have to worry about pissing off their providers who also serve their large group and Medicare Advantage populations as the co-ops don’t have large groups or Medicare Advantage to worry about.  They are able to craft narrowly tailored strategies that fit the needs of the people who are shopping on Exchanges. 

Incumbent insurers who offer a broad array of products to multiple market segments (individual, Exchange, small, medium, large group, Medicare Advantage, Medicaid managed care, CHIP etc) don’t have the luxury of narrowly crafting a strategy for a small but growing market segment in isolation.  Exchange decisions will be influenced by the need to keep large group markets happy.  For instance, an Exchange decision to offer Medicare plus 1% pricing for Exchange may not fly as the providers have the leverage of withdrawing not just from Exchange but from the commercial large group markets where they were getting Medicare plus 30%.  Or the decision to require referrals from an Exchange HMO but not a large group EPO will provoke provider resistance as their job just got more complicated for only a small population. 

I think the most important line from the report above is the expansion of three co-ops into West Virginia, New Hampshire and Idaho.  Idaho has an insurance market in 2014 that had multiple companies offering Exchange plans.  West Virginia and New Hampshire were single company states on the Exchange in 2014.  That means the sole insurer was mainly competing against itself and the state regulator’s ability to limit “outrageous”.  Co-ops are a viable competitor that will at the very least keep the big boys more honest.  And given the Maine experience, they could overrun the market.  I have doubts about that as the big insurance carriers will have a year of name recognition and the rules of the 2015 open enrollment period default people into sticking with what they bought in 2014, but competition is a good thing.

 

 

25 replies
  1. 1
    MomSense says:

    There are a couple of other factors in Maine. One is that we have a lot of self employed people up heah who have been screwed over for years by Anthem with super expensive and crappy plans with terrible customer service. The other is that because the health insurance situation has been so dire for so long, there have been a lot of community groups that have been discussing and organizing around health care access for decades.

  2. 2
    EconWatcher says:

    This is somewhat off-topic, but I’m wondering how much politics in Kentucky will change because of the apparently very successful implementation of ACA there.

  3. 3
    Cervantes says:

    Richard, do you have any comment on this article by Gruber and Graves?

    (Thanks.)

  4. 4
    rikyrah says:

    thanks so much for all your informative posts.

  5. 5
    Cervantes says:

    @MomSense: Did you ever see this “interview” with Carolyn Chute?

  6. 6
    Richard Mayhew says:

    @Cervantes: They are completely right — and that was supposed to be tomorrow’s post for me :) —

    There is a whole lot of churn in the group market due to job losses/job gains, and life situation changes, so people will still be going on the Exchange to enroll. Some of those people may only be on an Exchange policy for the summer, others may become long term Exchange users.

    Membership is never static for more than one file refresh cycle. Things happen.

  7. 7
    Cervantes says:

    @EconWatcher:

    This is somewhat off-topic, but I’m wondering how much politics in Kentucky will change because of the apparently very successful implementation of ACA there.

    If things do change, will we be able to credit the ACA with it? I think it’s difficult to say, and may remain so. For instance: every recent poll of the Senate race has Grimes even with, or slightly ahead of, McConnell. This is astounding in itself — to me, at least, as I have seen what McConnell has done to previous opponents over the decades.

    Can McConnell’s distress be attributed to the local success of the ACA? I do not know. What we all do know is that he hitched his wagon to the anti-President-Obama effort early on, and now he is less popular in his own state than the president!

    (I trust commenters in Kentucky have a better answer to your question than that.)

  8. 8
    Cervantes says:

    @Richard Mayhew:

    that was supposed to be tomorrow’s post for me :) –

    Sorry!

    But thanks for your quick response — and for the article above, of course.

  9. 9
    Davis X. Machina says:

    @MomSense: ‘Decades’ is right. The Maine state legislature commissioned a study of state single-payer back in 2002. The study was a less-than-half-a-loaf alternative to having the legislature actually consider a single-payer bill. Then-governor Angus King was one of the key players involved in killing funding for the study.

  10. 10
    draftmama says:

    In Montana Gov Brian Schweitzer set in motion at the end of his second term the creation of a health clinic for all 5000+ state employees. As a state employee one gets $733/month at present to purchase health insurance, I think from Pacific Source, BCBS is out of the picture.

    So state employees can go to this clinic which has doctors and nurses who are actual employees and get completely free primary care, no co pays, no deductibles, walk in or appointment and THEY LOVE IT!!! Gotta love the Gov.

  11. 11
    Yatsuno says:

    @draftmama: There were rumours of that possible expanding out to the greater Helena population. Any word if that happened yet? And how weird would it be to have a state like MT go single-payer before California?

    @Davis X. Machina: In 1998 the State of Washington undertook a massive study to reform the health system here. The result pointed clearly to single payer as the best and most efficient method. It even got to the floor of the Senate when Clinton stepped in and quashed it. We ended up with the crappy Basic Health after that. But if DC hadn’t intervened WA would have had this thing for almost two decades by now.

  12. 12
    MomSense says:

    @Davis X. Machina:
    Maine Peoples Alliance was organizing on health care at least as far back as the late 80s and there was a group of business owners in Southern Maine (York County mostly) who were meeting regularly on health care reform. If I spent a little time, I could probably remember some of the other groups and where they were located. Unfortunately today is crazy!

  13. 13
    Belafon says:

    @EconWatcher: Shhh! It’s not the ACA, it’s Kynect. The feds had nothing to do with the awesome power of Kentuckians to create something like this.

    //

    One of the interesting things I have watched about the ACA rollout is the way those who want it to work deal with people who dislike Obama: “Do I tell him that this is the ACA or do I just make sure that he gets insurance?” You know Republicans would tell you every third word if this was their program (and remind you to vote for them in November), but then again, they wouldn’t have to worry about the Democrat sitting next to them cutting of his her nose if they found out it was a Republican program.

  14. 14
    Mnemosyne says:

    @draftmama:

    The Giant Evil Corporation I work for is doing something like that in partnership with the local hospital (and when I say that the hospital is local, I mean that it’s right across the street from our main location). It’s an entire medical practice solely for employees and dependents of the GEC that’s convenient and promises to always be in-network, so you never have to worry about weird bills, extra co-pays, etc. The GEC is self-insured (they pay all the bills, Cigna just administers the plan) so they have more flexibility than a company that has to buy insurance from a third party.

  15. 15
    JustRuss says:

    It’s WellPoint’s only rival: Maine Community Health Options, a startup that didn’t exist three years ago.

    The newcomer, funded primarily by taxpayer money

    So one company had a monopoly on healthcare until the government propped up an alternative? That’s unpossible, the Free Market loves us too much to let that happen.

  16. 16
    Another Holocene Human says:

    This is great news, Richard. Given what the comments are saying about the Maine plan, some of these coops are likely to stick around. Just depends on how well run they are and how deep they go into the community.

    BCBS kind of started like a coop but was ruined early on by market collapse. There will always be market collapse, it’s fucking healthcare insurance. Thank goodness for the PPACA.

  17. 17
    Ella in New Mexico says:

    In line for first prize for “shit-tastic local non-profits” is Blue Cross Blue Shield of Tennessee that “insures” Lifepoint Hospitals, Inc. nationwide.

    We have way better options for residents here in NM, but because our corporate headquarters are in Brentwood, TN, we are given possibly the worst, most expensive health insurance option in the community. Try $3-6000 deductibles and as bad as 50% co-pays or certain costs for some of our employees making $60k or less– but low enough monthly premiums that hardly anyone qualifies for NM’s Exchange or Medicaid Expansion benefits. I don’t have it because being blessed by God, my husband works for the Federal Government and we still have actual health insurance. but my friend just maxed her deductible for her two little ones who had to have tonsillectomies and her husband who has had a couple of weird TIA events requiring visits to the emergency room— so she just sold her second car to pay the bills.

    Which is only rubbing salt in the wound that it is to actually work ununionized as a healthcare provider for these profit-worshiping, money-grubbing, evil corporate bastards.

  18. 18
    Ella in New Mexico says:

    And will someone remind me again why it was a good idea to lower the max you can put into a Flexible Health Savings Account to from $5000 to $2500 per family?

    Cuz thanks to the money grubbers at the top of the corporate and insurance food chains, pretty much all of us getting insurance through our employers are being forced to pay higher out-of-pocket costs. My brother works as an (albeit decently paid middle class income) engineer at Honeywell, and all he has this year is the equivalent of a high deductible catastrophic plan with the Essential Health Benefits of the ACA patchworked in.

    He and his wife and kids just aren’t going to the doctor this year unless it falls under one of the freebie benefits, which is bad because he has neurological sleep apnea and she has lupus.

  19. 19
    Davis X. Machina says:

    @MomSense: MPA member since ’85,,,

  20. 20
    Mnemosyne says:

    @Ella in New Mexico:

    but my friend just maxed her deductible for her two little ones who had to have tonsillectomies and her husband who has had a couple of weird TIA events requiring visits to the emergency room— so she just sold her second car to pay the bills.

    Make sure your friend knows that once she hits $12,700 out of pocket, she gets to tell the people billing her to talk to the insurance company, because she doesn’t have to pay another dime. They’re going to try and tell her otherwise, and they’ll probably threaten to ruin her credit, but once the family gets to that limit, she is not responsible for any additional bills.

    (That $12,700 is for a family — for an individual, it’s $6,350.)

    Also, if your brother’s work insurance sucks that bad, have him check the exchanges. He won’t be able to get a subsidy, but he may be able to get a better policy for what’s currently being taken out of his paycheck by his company, and his company is not allowed to stop him from doing that.

  21. 21
    Ella in New Mexico says:

    @Mnemosyne:

    if your brother’s work insurance sucks that bad, have him check the exchanges. He won’t be able to get a subsidy, but he may be able to get a better policy for what’s currently being taken out of his paycheck by his company, and his company is not allowed to stop him from doing that.

    He tried. Sadly, he couldn’t get around the Affordability Standard/9.5% rule, or at least that was what he was told by the people he contacted at our Marketplace. I’m still not sure they were right, but he makes a little over 100K, so that’s a high bar to jump. Amazing you can spend just under 9.5% of your income for almost worthless health insurance.

    And my friend has actually gotten to that place where she won’t pay much more out of pocket this year, God willing. But $6 grand has almost wiped her out, given their total income.

    The anti-ACA’ers really knew how to place their poison pills in this legislation, didn’t they?
    https://www.healthcare.gov/what-if-i-have-job-based-health-insurance/

  22. 22
    Mnemosyne says:

    @Ella in New Mexico:

    Sadly, he couldn’t get around the Affordability Standard/9.5% rule, or at least that was what he was told by the people he contacted at our Marketplace.

    I’m pretty sure he was told incorrectly. As that website says, he’s not eligible for any subsidies, but if he wants to leave his employer’s insurance and buy his own policy, he absolutely can do that. I got a letter explaining it from my employer, but I’m guessing his may not have been quite so open.

    It’s kind of too late for this year because the open enrollment period has ended so, unless he has a qualifying event (like losing his job), he won’t be able to make the change, but he should look into it for next year if his employer insurance continues to suck.

    ETA: My insurance is very good, but (A) I’m in California where we rawked the state-based exchanges and (B) the Giant Evil Corporation I work for attracts people on the basis of their benefits package.

  23. 23
    Ella in New Mexico says:

    @Mnemosyne:

    if he wants to leave his employer’s insurance and buy his own policy, he absolutely can do that

    That’s what I told him, but I think he WAS mislead by his company, and had a hard time communicating with the Exchange people so he finally gave up. It is kind of confusing when they say “not eligible for subsidized plan on the exchange” but fail to tell you you don’t need the subsidy to be eligible to buy it. He could have bough a Gold level plan for a reasonable monthly fee and avoided the big deductible all-together. Arrrggghhh…..

  24. 24
    draftmama says:

    @Yatsuno: Not so far, but the community health clinics may link up some time. The clinic for state employees is run by a private company, and the health clinics are run by the counties and the state, but its certainly a start in developing a network of universal health care here. We can live in hope!

  25. 25
    draftmama says:

    @Mnemosyne: Since GEC’s hate having to bear the burden of insurance I think this model will become much more common in the next few years, and expand into the network of universal care that we all want so much.

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