“Pleasantly, almost across the board nationally, co-ops have been received with open arms by hospitals and doctors and providers of all kinds who welcome our influence in the market and who have given us great deals,” Morrison said.
But covering people with a habit of showing up repeatedly in hospital emergency departments poses large risks.
“A lot of systems have loyally uninsured people who come back over and over,” said Kathleen Oestreich, CEO of Meritus Health Partners, the Arizona co-op. “In exchange for network pricing concessions, we said, ‘We’ll design a product for your system, and we will work with you to… reach out to your historically uninsured.’”
Co-ops say they’ll handle the costs of the chronically ill with health-act reinsurance dollars designed to temporarily compensate plans with high expenses and by managing treatment more efficiently.
“Old insurance was transactions and avoiding risk. That’s how you made money,” said Dr. Martin Hickey, CEO of New Mexico Health Connections. Now, he said, insurers need to “identify your high risk people, intervene with them… to stabilize their lives, to get them on the right meds and keep them out of the high-cost hospitals who are purely volume- and revenue driven.”
Co-ops also brag that they avoid the palatial headquarters, bureaucracy, clunky computers and high CEO salaries of their rivals.
“We don’t have the legacy systems,” said Kevin Lewis, CEO of Maine Community Health Options. “We don’t have the Taj Mahals or the overhead of some of our competitors.”
Co-ops face skepticism from right and left. Republicans see the startup money as likely to be wasted and compare them to Solyndra, a taxpayer-backed solar-panel company that went bankrupt. Even backers of the health law believe co-ops face steep challenges.
But a July report from the Department of Health and Human Services’ inspector general gave a largely positive progress report. Co-ops claim they’re already doing their job of adding competition.
“In New Mexico I can tell you our presence drove the rates down substantially from where they were,” said Hickey. “We have the white hats on right now.”
Said Morrison: “If co-ops price their product right [and] get significant market share through the exchange, we will through our practices force the rest of the marketplace to change.”
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.
Wed, Sep 11 2013