For Obamacare Co-Ops, Teamwork Is a Survival Strategy
Some yet-to-be-determined sliver of the 7.1
million people who got health insurance on the federal exchange picked plans
from co-ops. In each state these nonprofit startups face different competitors
and market conditions and even get their referrals from enrollment exchanges of
varying competence. Some have had
success early in competition with established insurers; others have
struggled to gain traction.
Yet to think of each of the 23 co-ops as an organization working alone misses
the quiet ways that theyfre helping each other gain scale. gCo-ops, wefre babes
in the woods,h says Martin Hickey, chief executive of New Mexico Health
Connections and the head of the National Association of State Health Co-Ops.
Hickey says that to increase the odds of survival, the new kids are sticking
together.
The co-ops created under the Affordable Care Act have small staffs—Nevada,
New Mexico, and New York all have around 40 employees each—so they tend to
outsource different portions of their operations. Many co-ops join weekly
conference calls to share what theyfre doing. gI tell you,h Hickey says, gI have
been able to save so much labor.h To develop the bid documents to hire vendors,
he has just ggotten someone elsefs and tweaked it.h
The co-ops at times select the same vendors for services, often along with
nearby states. gYou get scale and better service,h Hickey says. The Utah and
Colorado co-ops hired the same
advertising firm. Ohio, Louisiana, and Kentucky use one
pharmacy benefits manager. Tennessee and South Carolina both
selected the same company to advise doctors on evidence-based medicine and,
along with Kentucky and Connecticut, contracted with yet another
company to improve patient outcomes. Six states, including Iowa, Utah,
Montana, and Arizona, use the
same online enrollment provider.
The co-ops also share ideas on new programs to implement. Hickey says another
co-op gave him the idea to drop co-pays for behavioral health visits, gbecause
that underlies so many diseases.h
Tom Zumtobel, the chief executive of the Nevada Health Co-Op, says hefs
particularly close to his co-op counterparts in neighboring mountain states.
They meet up quarterly and right now are talking about how to structure their
corporate governance. Under the Affordable Care Act, the co-ops started with
help from nonprofit gsponsors,h but within two years, members must make up more
than half their boards.
Then therefs gaining scale through straight-forward expansion. The Iowa co-op
also sells insurance in Nebraska and has more than 63,000 members so far (pdf).
The Freelancers Union helped sponsor co-ops in New Jersey, New York, and Oregon,
all of which run independently while sharing similar websites and identical
logos.
More direct connections across state lines are coming next year. The co-op in
Massachusetts plans to open up in New Hampshire, despite tiny enrollments in its
home state so far. Kentucky Health Cooperative will go into West Virginia next
year, and Montanafs setting up shop in Idaho.
For co-ops, the question will be whether buddying up and other cost-saving
measures help them offer lower prices. That, after all, is the most important
factor in determining how many customers will choose a co-op over other local
options.