When Florida's 11 regional healthcare purchasing cooperatives asked for competitive bids in February from 50 insurers that wanted to cover the cooperatives' patients, the cooperatives had nothing to offer. They had no members.
But eight months later, the cooperatives have enrolled 1,474 small business with 6,648 employees and dependents.
Although that's less than 1% of the 310,500 small businesses eligible to participate in Florida's unfolding experiment in managed competition, the state is pleased with the numbers, according to Edward Towey, a spokesman for the state Agency for Health Care Administration.
"We just started the marketing effort (in August). Since we began enrollment (in May), we have seen a 10% increase in members each month," Mr. Towey said. "When people evaluate the prices, types of plans and coverage, memberships will increase at a faster rate."
Under Florida's healthcare reform law, which was passed in 1993, businesses with fewer than 50 employees can join community health purchasing alliances, or "Chippas."
Florida's Chippas are quasi-governmental bodies that solicit bids from competing health plans. The Chippas' members, which are small businesses or self-employed individuals, use the information to select from a variety of insurance plans.
Chippas, in theory, can offer health insurance below commercial rates by using their members' collective bargaining power to drive down healthcare prices from groups of providers and insurers, which are called accountable health partnerships.
Mr. Towey said data indicate that individuals who choose a managed-care-type policy through Chippas are saving an average of 20% to 25% off the price of commercial insurance obtained directly from plans.
Chippas offer various insurance products, including HMO, PPO and fee-for-service policies. To date, some 89% of the people who have obtained coverage through Chippas have chosen HMO or PPO coverage (See chart).
Overall, savings for all types of insurance coverage through Chippas are expected to average about 10% below commercial rates, Mr. Towey said.
But not everyone is as ecstatic about Chippas as state officials are.
Robert T. Jones, director of government relations for HIP Network of Florida, a Fort Lauderdale-based HMO, said small businesses have many good policies to choose from outside of Chippas.
The HIP Network has 35,000 enrollees in its Florida health plan, but none have come through Chippas.
Over the last three years, HIP's largest area of growth has been in the small-group market, Mr. Jones said.
"We didn't expect a boom of business (from Chippas)," he said.
He added that the state should work more closely with insurance brokers to encourage them to market Chippa-solicited policies to small businesses.
"Brokers are still concerned about how they will be involved in the future," Mr. Jones said.
State law requires Chippas policies to be purchased through licensed insurance agents, but that requirement could be dropped if the state mandates small-business participation in Chippas.
Of the 310,500 businesses with fewer than 50 employees in Florida, 55% offer health insurance to their employees. Florida has targeted small businesses for help because 4.1 million, or 60%, of the state's 6.8 million workers are employed by small businesses. Small businesses represent 90% of the companies in operation in Florida.
Overall, 25% of the state's 14 million residents are uninsured, compared with 17% nationally, according to the state Agency for Health Care Administration.
In a May report on state healthcare reform efforts, the General Accounting Office said at least nine states, including Florida, have either approved or are considering various types of group purchasing cooperatives as part of healthcare reform packages designed to reduce the number of uninsured and contain rising costs.
The GAO report indicated that group purchasing cooperatives that actually negotiate prices and benefits on behalf of their members get better deals from insurers than cooperatives that simply solicit competitive bids.
The GAO reviewed five public cooperatives, four private cooperatives and the two existing statewide cooperatives of Florida and Washington.
The GAO said expanding cooperatives' negotiating powers nationwide could increase insurance access to the nation's 38 million uninsured, 75% of whom are employed.
Florida Gov. Lawton Chiles is expected to attempt to amend the state reform law next year to allow Chippas to negotiate on behalf of members. Such a provision was opposed by the insurance industry in Florida and omitted from the original reform legislation.
Mr. Towey said 592, or about 41%, of the small businesses using Chippas are offering insurance to their employees for the first time. The remaining 59% dropped their old policies and opted to join Chippas because of lower costs and improved coverage, he said.
Florida's standard benefits package covers hospital, physician, preventive and emergency services with a $1 million lifetime limit.
Meanwhile, Florida officials say they're hoping for a huge upswing in Chippas participation with two changes waiting in the wings.
Last month, Florida won federal government approval to enroll its 1.4 million Medicaid recipients in managed-care programs through Chippas. But the state Legislature still must approve Mr. Chiles' "Health Security Act," a bill lawmakers defeated twice in the past year.
Also, state officials are studying the feasibility of enrolling the state's estimated 150,000 employees in Chippas health plans. Mr. Chiles supports Chippas coverage for state employees.