Call Us +852 3113 1331

Working Together: Health Insurance Co-Ops

Posted on Jun 04, 2013 by Ailee Slater ()  | Tags: Affordable Care Act, co-operative health plans, Group Health, health co-ops, obamacare, online insurance exchanges, Oregon's Health CO-OP

A food co-op is a place you go to buy organic groceries in a non-corporate, community-run environment. A housing co-op is a place where neighbors work together to create, alter or govern a place of residence. A banking co-op is an institution controlled by members. And, a health co-operative? The role of a health co-op in the United States is still being realized, but thanks to Obamacare, insurance co-ops may become common place a lot sooner. 

Starting this October, 24 states will introduce their own co-op insurance plans. A co-op insurance provider is different from a traditional insurance plan because the co-op is owned and governed by the customers who purchase the plan. Most insurance companies have a board of directors hired to set prices, determine payments for doctors and make other important decisions. In a co-op, these directors are insurance plan members, chosen for the leadership role by fellow plan members.

Health co-ops are not common in the U.S., but there are a few examples of established, popular co-operatives. In Seattle, the Group Health co-op has been operating since 1947, offering residents coordinated health care and insurance coverage through a co-operative system. Group Health has over 600,000 members, and works with individuals as well as employers such as Microsoft Corporation, Macy's and United Airlines.

Group Health's focus on patient-centered care and affordable, high quality services has won the co-op many devoted members. And, with provisions in the Affordable Care Act, more states will have the opportunity to create their own version of a co-operative health plan.

The Affordable Care Act is providing $1.9 billion in low-interest federal loans to 24 states for the creation of health co-ops. The government originally set aside $6 billion, to help every state create a co-op plan, but budget cuts led to a reduction in co-op funding. Politicians wary of the plan say that nearly $2 billion is already too much money for the federal government to spend, and that some states may be unable to return the loans if their co-op plans fail.

However, plenty of advocates in the government and the health care industry are confident that state co-ops will function well and save plenty of money in the long run. Champions of co-ops, such as senate Democrat Kent Conrad of North Dakota, have also noted the benefits to marketplace competition that come with bringing co-ops to the public - they may lower overall costs for patients, and encourage mainstream insurance plans to experiment with the common co-op practice of offering doctors a salary, rather than basing pay on the number of patients served.

For a customer, there are many advantages to joining a health co-op as opposed to purchasing traditional health coverage. Because a co-op has no outside shareholders, the organization's focus is always on the doctor and the patient; not on making the business a profit. Health co-operatives tend to succeed at keeping administrative costs low, which helps keep good care affordable. Co-ops also tend to emphasize primary care and doctor/patient relationships, creating an atmosphere in which a patient takes more responsibility for her health.

Also, because insurance co-ops tend to be smaller and more local, they can better tailor services to the area and people served. At the moment, New Mexico is using their portion of the $1.9 billion to create a co-op that will, among other things, better support patients with diabetes; a common chronic disease in the state. Kaiser Health News reported this week that the New Mexico co-op will give money to community health care workers, who will then visit diabetes patients in their homes and advise these patients on nutrition and diabetes management. The program should reduce the number of patients who allow their disease to get out of control, and save the state money by reducing hospital stays and costly trips to the Emergency Room.

All 24 of these new insurance co-ops should be functional by October 2013, when online health insurance exchanges (created through the Affordable Care Act) will open across the nation. When comparing traditional versus co-operative plans, many individuals and small businesses may be tempted by the local, patient-friendly attitude of a co-op.

Of course, getting these co-ops up and running may face some challenges. There is concern that the $1.9 billion in federal loans will not be enough - after all, it takes a great deal of funding to start an insurance co-operative from scratch, and some states are already looking into private funding to help cover costs. What's more, these co-ops must provide excellent service from the get-go, before revenue from premiums has begun to flow, which means lots of pressure to enroll new customers as quickly as possible. Co-ops must also use revenue to hire high caliber employees, and to offer patients quality services while keeping prices affordable.

States that have released initial co-op details are proposing very reasonable premium rates, despite initial concerns that co-ops would be forced to charge customers well above market prices. Kaiser Health News writes a 40-year-old nonsmoking man in Oregon can expect to pay $234 per month on the Oregon's Health CO-OP plan; with another, traditional insurance plan in the state, that same man would pay anywhere from $169 to over $400.

In the end, the success or failure of state health co-ops will be largely determined by how well these plans can balance the factors that influence every health insurance policy: price, benefits, customer service and standards of care. For the sake of its $1.9 million dollars, the Obama administration is no doubt hoping that co-operatives are up to the challenge.

Be Sociable, Share!