Small businesses and individuals have a new and different option for health insurance, thanks in part to the Affordable Care Act.
The recently approved Colorado Health Insurance Cooperative is a consumer-driven company. Insured members will make up the majority of the board, and will direct much of the decision-making process as soon as 2014, said Julia Hutchins, CEO of the fledgling company.
The company received $69.4 million from the Affordable Care Act, and final approval in March 2012 from the Colorado Division of Insurance and the federal government.
“It’s all about turning health care on its head,” said Hutchins, who worked as CEO of Colorado Access, a nonprofit health insurance plan for low-income, underserved residents, before taking the top job at the Colorado Health Insurance Co-op. “We really saw a need to have a consumer-driven product, to have needs met in a different way.”
The Colorado Co-op joins 24 other insurance cooperatives nationwide that got seed money from the federal government. Once up and running, the companies will be private, nonprofit insurance businesses, and will pay back the federal government. The government lent $1.9 billion to the cooperatives to get started.
Colorado is one of the lucky states, said Jan Van Riper, executive director and CEO of the National Alliance of State Health Cooperatives.
“We had about 40 more cooperatives in the pipeline when Congress let sequestration start,” she said. “That took all the money for startups. We’re pretty much capped at 24.”
Federal seed money is needed because starting an insurance company from scratch is very expensive, she said. But it’s a necessary expense.
“Many states have only one or two insurance companies,” Van Riper said. “There’s a monopoly. Congress wanted to make sure that there was competition, and that health care users actually had a say in developing new innovations for care and for payments.”
For instance, in some states, cooperatives will pay doctors more if they spend more time with individual patients. Others, like in Arizona, plan to use health information technology to improve care, as well as foster business startups for health care access. In Maine, cooperatives are focused on migrant, tribal and community health centers.
What sets Colorado apart? Hutchins said it’s the structure of the company. Co-ops are governed by their members, and have an obligation to partner with doctors, hospitals and advocates statewide to create benefits.
“We’ve spent some time determining the best ways to deliver care and to pay for it,” she said. “We’ve spoken with health care providers, and with brokers and with consumers. Health care is local, and every community’s needs are different. We’re going to be flexible, a lot more nimble than large companies can be.”
Small businesses, in particular, will benefit from the cooperatives. The small business market is typically more expensive than large-group insurance, because risk pools are smaller. In co-ops, any profits go back into providing care and payment services, lowering premium costs.
“Our ultimate goal is to pay for quality medical care as efficiently as possible for members, support health for individuals and improve their health to decrease costs,” Hutchins said. “We’re really doing this in a very different way. Our goal is no surprises with coverage.”
Part of that means partnering with employers to provide health information and education — to add transparency about health care’s actual cost, she said.
“We want to help people make better choices,” she said. “The part that gets lost in health care discussions is the role that individuals can play in their own health care. We are going to find ways to make sure we improve health for every dollar spent. And that includes preventive care and incentives for people to be healthy.”
The group will push for more coordinated care among providers, specialists and hospitals. The reception from those giving care has been good.
“We’ve talked to providers in the Springs, and we just had a meeting with brokers there,” Hutchins said. “The reception has been good. I think they like our plans to be nimble and flexible.”
Hutchins said a group of volunteers from Rocky Mountain Farmers Union started investigating the possibility of a rural co-op two years ago. After market research, they decided the co-op had to be statewide to be successful.
Eventually, CHI will have chapters across the state. Benefit plans will be offered at silver and gold levels, and a value-based plan in the small-group market.
It will take time to determine if the cooperatives are successful. Plans start offering policies in October, and new insurance products will go into effect in January. The policies will be available on Colorado’s Health Care Exchange as well.
“We’re entering the marketplace, and it’s a new phase for health care,” Hutchins said. “We’re local in Colorado, and we plan to cover the entire state. … The time is ripe for this to really help small businesses meet health care needs.”