Whither Those Nonprofit Health Insurance Coops?

Print Share on LinkedIn More

December 22, 2012; Source: Northwest Herald

Remember the public debates last year about nonprofit cooperatives offering health insurance as an alternative to the quickly discarded “public option” in national health care reform? In Illinois, a new nonprofit called Land of Lincoln Health has announced plans to offer health insurance coverage in Illinois in 2014. According to the Associated Press, the nonprofit has received HHS approval to offer health insurance and a $160 million start-up loan.

It seems a little surprising that the advent of new nonprofit or cooperative health insurers hasn’t gotten much press or public attention. One would think that the creation of new nonprofits that would functions as crucial components of the most significant social welfare legislation of the new millennium and serve tens of thousands of individuals and small businesses would be big news in the sector. Somehow, the advent of a relatively new genre of nonprofit hasn’t attracted the nonprofit sector attention we think it deserves.

In Montana, a new nonprofit health care cooperative is getting off the ground with a $58 million federal start-up loan, with plans to serve 10,000 customers in its first year of operations in 2014 and 40,000 by its third year. If it gets to that level of business, the Montana Health Cooperative will be “financially viable.”

Although these new organizations frequently have experienced health care providers on their boards and their executive teams, it seems that they are going to have some major challenges in moving from barely in existence in 2013 to generating thousands of customers in 2014 and beyond. We presume many will be competing on state and federal health exchanges with established commercial health insurers. Can new health cooperatives get up and running quickly enough to be successful and productive? If NPQ Newswire readers are watching health cooperatives in their states, we would love to hear your perspectives on how they are shaping up and what they are doing to compete in the health exchanges.—Rick Cohen