Insurance co-ops faded from view but still ripe for analysis

About Joanne Kenen

Contributing editor to Politico Magazine and former health care editor-at-large, Politico, Commonwealth Fund journalist in residence and assistant lecturer at Johns Hopkins Bloomberg School of Public Health.

Former AHCJ president Trudy Lieberman, in a CJR “Second Opinion” post, recently pointed out a story that was largely untold– and put it in a helpful national and political context for those of you who may still tell it. That’s the “incredible shrinking insurance co-ops.”

The co-ops’ funding was slashed in the New Year’s fiscal cliff deal. With all the other economic and political aspects of the “cliff,” the co-op story was not widely reported, including in some of the states where they may have made a difference.

Why does it matter? Remember the long battle in 2009-10 over the “public option?” The Consumer Operated and Oriented Plans were the alternative – arguably a sort of consolation prize – to the public option. The co-ops were a way to have a nonprofit health plan alternative to the largely private commercial plans expected to dominate the exchanges.

Lieberman quotes John Morrison, Montana’s former insurance commissioner, now president of the National Alliance of State Health Cooperatives, as saying the co-ops were scrapped not so much to save a few billion dollars for the fiscal cliff deal but as “a gift to the insurance companies” that didn’t want to compete with them. They were expected to have been particularly useful in giving small businesses more choice in rural areas dominated by one or two health insurance carriers.

The co-ops are nonprofits, with boards made up of public representatives. The Affordable Care Act initially had $6 billion set aside to in loans to develop them– some to be repaid in five years and some in 15. But that was cut by more than a third in a 2011 budget deal. Part of that’s been allocated to help two dozen co-ops get up and running. But those that hadn’t been funded when the fiscal cliff deal was cut – and those that were pending – were cut off. No more will be funded.

Lieberman notes that even the co-ops that were funded and are going forward may be handicapped – they can’t use federal funds to “market” the plans (although they can be included in whatever general marketing and education the exchanges and advocacy groups promoting enrollment do.) Lieberman said reporters should fill in the gap, smartly and fairly:

“The co-ops … are counting on the press to tell their story. Fair enough. But the story we tell must be more than a puff piece. It is the kind of story old-school consumer reporters used to do, complete with solid analysis of what their policies offer. That means scrutinizing and evaluating benefits, prices, restrictions — how the co-ops policies are better (or worse) than what the competition offers. If journos reporting on this new insurance animal do find it can provide a better product, then maybe co-op insurance might take off after all.”

Resources

  • For more background on what a co-op is, and some examples of successful ones that predate the health law, see this 2009 “tool kit” from the Alliance for Health Reform. It was written before the final legislation was passed in the Senate, but is still a useful overview.
  • Here’s an HHS fact sheet – it was written before the funds were cut off, but it explains the federal program that applies to those that are going ahead.
  • While much of the focus has been on rural areas – the Freelancers Union is expanding them through New York, New Jersey and Oregon.
  • The Urban Institute also did a paper analyzing some of the potential barriers to co-ops’ success.

1 thought on “Insurance co-ops faded from view but still ripe for analysis

  1. Pingback: Writing about co-ops: A taste of the complexity | Association of Health Care Journalists

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