The healthcare cooperative health insurance plans established by the Affordable Care Act, although much maligned, still have the potential to be the agents of transformational change consistent with their missions. They are better suited to lead in efforts for improving the quality of care and coverage while promoting competition and efficiency than the established insurance industry.
A distinguishing feature of plans in the CMS' Consumer Operated and Oriented Plan, or CO-OP, Program is the board of directors is elected by policyholders. Ideally these boards will prove more attentive to the needs of consumers than the management of traditional insurance companies.
Unfortunately, political hostility toward the CO-OP insurers has necessitated a focus on survival rather than engaging the mission of improving care and service. The big blow was when the Republicans in Congress stymied the CO-OP insurers by adding a provision to a budget agreement in December 2014 preventing the government from making the “risk corridor” payments that insurers on the exchanges were expecting and remain legally entitled to receive. The congressional sabotage forced a number of CO-OP insurers to fold while leaving others in limbo. As of the end of May, only 10 of 23 CO-OP insurers formed in 2013 were still in business.
Although most of the news about CO-OP insurers revolves around their financial struggles in shoring up reserves, I caught a glimpse of the positive impact a CO-OP insurer has had for my employer, Carroll College in Helena, Mont. After years of steep increases in claims costs, the college chose the Montana Health Co-op (MHC) to provide insurance for its 250 employees in 2015. Our claims costs dropped by over 40% from the previous year, reversing the long trend of soaring costs even while offering a moderately more generous plan.
There were a number of reasons behind the decline, including fewer hospitalizations. However, certain factors are fully attributable to the business model of MHC. The CO-OP insurer has proved far more transparent in providing details about costs and claims. Gone were the opaque statements about costs provided by other insurers including categories such as “miscellaneous” that went unexplained. We now have full information about what costs are truly medical and a host of other technical details. MHC has also provided an employee to attend weekly meetings of the college healthcare task force to provide ongoing support for controlling costs. Further, two college employees (including me) were elected to serve on the board of directors allowing for additional oversight. Affiliating with a small insurance company that is a true not-for-profit governed by a board of consumers has had a positive impact for Carroll College and is partly responsible for reversing what had appeared to be the intractable burden of higher claims.
Another area where CO-OP insurers can take the initiative is forming relationships with strategic partners and investors, such as hospitals. Such partnerships are important in allowing the CO-OP insurers to compete against giant insurers but are difficult to forge in a hostile political environment. New rules from the government that took effect May 11 attempt to encourage these partnerships by allowing representatives of business partners not elected by consumers to occupy seats on the board and dropping requirements that a majority of the board must be CO-OP members. Although well-intended, the change in rules for board composition puts at risk what makes the CO-OP insurers unique. The CO-OP insuers that survive must remain faithful to their mission and avert capture by industry and special interests.
Policymakers could encourage CO-OP insurers to seek out large employer plans instead of limiting most of their business to the exchanges and small-group plans.
In the 2015 book Ensuring America's Health: The Public Creation of the Corporate Health Care System, Christy Ford Chapin found that the evolution of the system placing insurance companies central to both financing and managing healthcare has driven up costs and added unnecessary complexity. What she calls a “poor gamble for society” cries out for reform. It is imperative to nurture and sustain the CO-OP insurers that provide a platform for inspiring innovation rather than smashing them on an anvil.
Jeremy Johnson, Ph.D., is an associate professor of political science at Carroll College in Helena, Mont., and a member of the board of directors of the Montana Health Co-op.
