Successes of Nonprofit CO-OP Insurance Confounds Critics

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April 2, 2014; GantDaily

It is truly galling the way much of the mainstream press has treated the nonprofit health insurance cooperatives established to provide a modicum of competition for the big private health insurers on the Affordable Care Act exchanges. Last week, we found a widely distributed Associated Press story that largely declared the efforts of the 23 consumer-run nonprofit cooperatives a failure. In a sentence that didn’t quite make sense, the AP article declared, “Rather than promote competition, the co-ops and smaller nonprofits in some states have languished behind major insurers, attracting in some cases minuscule shares of the market.” AP acknowledged that the cooperatives started with plenty of obstacles, which were made worse by pernicious policy decisions from Congress. Besides being mostly new startups facing off against the likes of Anthem Blue Cross Blue Shield, United Healthcare, and Aetna, they faced the same exchange website glitches that the big insurers did, but Congress prohibited the cooperatives from using federal resources for advertising, prohibited them from negotiating deals with large employers, and converted federal grant funds to loans—and, in the fiscal cliff deal, eliminated additional funding for cooperatives.

There was no question that the nonprofit cooperatives were not going to sufficiently replace the public option that Congress so vociferously opposed, but most readers of the AP article came away with the impression that the cooperatives were waste of time and resources. Even with a mention that the cooperatives in Wisconsin and Maine have shown signs of success, the key parts of the AP article were still the stories of the 650 people who had signed up with Maryland’s Evergreen Health Co-op and the three-fourths short of target performance of HealthyCT, which left a clear and powerful impression.



The ideological view of nonprofits as being somehow less worthwhile than for-profits seems to permeate the press, especially as nonprofit leadership organizations did little or nothing to stand up for the nonprofit cooperatives when Congress went off the deep end to help the cooperatives flop. Sometimes this view suffuses nonprofits as well. It is extraordinary how little attention has come from nonprofit sources about the evidence that the nonprofit health insurance cooperatives have done reasonably well in some states, and in some cases, remarkably well.

In Maine, the nonprofit cooperative there reportedly has as much as 80 percent of the market. Montana’s co-op has grabbed about 40 percent of the new exchange market, the co-ops in Nebraska and Iowa about 50 percent, and in Kentucky, 60 percent. (Other reports have Kentucky’s cooperative grabbing 77 percent of the sales on the exchange.) New Mexico Health Connections had some 10,000 sales as of the end of the official enrollment period.

Beyond enrollment numbers, another surprising impact has come from stimulating with monopolistic private insurers the kind of market competition that had been expected of the public option. “The co-op states have 8.4 percent lower premiums on average than the non-co-op states, across the marketplace,” reports John Morrison, who was the first president of the National Alliance of State Health CO-OPs. “So co-ops are creating that competition. They’re keeping rates down in the states they’re operating in.”

This was the first year—or, actually, first six months—of enrollment activities for these 23 new nonprofit cooperatives. If Congress came to its senses, it might remove the legislative impediments legislators have strewn in the cooperatives’ paths. Realize that these new nonprofit cooperatives, according to industry experts, don’t have any of the profitable options for lines of business that have undergirded the revenues of the big insurers such as Medicare Advantage, Medigap, and Medicare part D. As the cooperatives move into year two of the Affordable Care Act, the nation could improve its provision of healthcare insurance for all Americans by bolstering the chances of success of the nonprofit consumer-run cooperatives. Nonprofit leadership groups ought be standing with the cooperatives to make that happen.—Rick Cohen

  • Russ Woodruff

    Our family has endured the downside of ACA. WE live in Washington State. We have limited choices on insurance. My wife and I are self-employed so we have to buy individual insurance for our family of 3. We earn just enough to not qualify for any subsidy.. Our prior policy was cancelled. The new “bronze” level replacement policy costs more. Has a higher deductible and less coverage. We previously had dental as a separate policy for all of us. Now our child is covered under the health insurance. Hooray we thought. In reality she has no coverage as all dental costs are subject to first meeting the $12,000 annual deductible. Bottom line – we would so love to have a co-op that could challenge the big commercial for-profit insurance companies in our state. But of course, the for-profits will do everything they can to hold onto the windfall they are getting from ACA and it appears that government and the media are going to support keeping their coffers filled.

  • Colleen Lukoff

    Thank you for sharing this important information. It will be helpful to let people know that there is an alternative to the “big” companies.

  • Jeremy Engdahl-Johnson

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