Nonprofit Insurance Co-Ops Thriving Despite ObamaCare Web Struggles

December 6, 2013       Zach Halper      

While the rollout of the Affordable Care Act’s (ACA) healthcare marketplaces has been marred by technical glitches on the national website, nonprofit health insurance co-ops established by the law are experiencing modest success.

The law popularly known as ObamaCare debuted its most talked about provision when the initial enrollment period for the health insurance marketplace went live on Oct. 1. That rollout was bumpy, to say the least, with many people unable to register to buy coverage due to the volume of visitors to the site, Healthcare.gov.

A less talked-about provision of the marketplaces was the nonprofit health insurance co-ops. Unlike traditional health insurance companies, members have a voice in the day-to-day operations of the co-op. Profit is not a concern with these entities because members essentially operate as shareholders.

When the ACA was in its early stages, co-ops were initially supposed to be in all 50 states. Those plans fell through after the Center for Medicare and Medicaid Services (CMS) announced the original $6 billion funding model would be reduced to $2 billion for 23 low-interest co-ops in 24 states. All 23 of the co-ops that CMS has provided loans to through this program are nonprofit.

While these reductions in funding and federal restrictions have been problematic for some of the co-ops – one in Vermont had to close its doors after the U.S. Department of Health and Human Services (HHS) terminated its contract – that experience is not shared across the board, according to Julia Hitchens, chief executive at Colorado HealthOp.

Hutchins acknowledged that some of the federal restrictions have been challenging but haven’t exactly set them up to fail. “In some way we don’t see these as restrictions, per say, since they’ve been part of this program from the beginning,” explained Hutchins.

One of the restrictions forbids co-ops from using federal money for marketing. To get around this, Hutchins dispatched scantily clad models into Denver to educate the public on the benefits of getting covered by health insurance plans. While acknowledging that marketing that way is “difficult,” Hutchins said the results were a success, as it led to “countless” media requests and inquiries from the general public.

Hutchins explained that co-ops have additional benefits for members compared to traditional insurers. For example, members can receive gifts (such as a $100 debit card) for completing certain requirements each year, such as taking a health risk questionnaire. In addition, excess revenue goes back into improving quality, benefits and reducing premiums.

While Hutchins could not provide specific enrollment numbers as of this writing, she said that 50,000 people in Colorado signed up for accounts on the website.

An equally sunny picture is being painted on the other side of the country by Debra Friedman, president and CEO of Health Republic Insurance of New York. Friedman said that neither the federal restrictions nor budget cuts have had much impact as of now. In fact, she said the co-op exceeded its goals regarding outreach, engagement and enrollment, though they did not yet have specific numbers to share.

“We are pleased with our progress and momentum since the exchange opened on October 1,” said Friedman.

Health Republic Insurance of New York has also been involved with local nonprofits. Friedman noted that the co-op has an active outreach and education program focused on driving member engagement.

“We partner with local community centers, churches, synagogues, etc., throughout the state in an effort to continue to drive excitement about Health Republic Insurance’s innovative offerings,” explained Friedman. Without identifying the specific nonprofits with which Health Republic Insurance of New York has worked, Friedman further elaborated that they generally partner with organizations likely to have uninsured members that have been overlooked by traditional health insurance providers.

“Whether it be social organizations, arts groups or local business improvement districts, our efforts have been centered on engaging the potential member or business owner in the neighborhoods they live and work,” explained Friedman. “It might be at a street fair or an art show representing unknown artists, but we are there with the same message.”

Colorado HealthOp has been working with local nonprofits to educate the public, which Hutchins said has been a big help. One such organization is the Colorado Consumer Health Initiative (CCHI), a coalition of nonprofit health care advocacy groups. Part of Colorado HealthOp’s partnership with CCHI included a blog that Hutchins posted in September, which explained the benefits of the services.

According to Adam Fox, director of strategic engagement at CCHI, these kind of efforts are necessary due to the unfamiliar nature of the co-ops. “I think there’s just a huge unfamiliarity with co-ops, which is why we’re trying to raise awareness and show how they are different from other insurers,” said Fox. “Consumers in Colorado don’t think of the co-op model as being used for health insurance.”

CCHI has been heavily involved in its own engagement, not just about the co-ops, but also the new healthcare options provided by the ObamaCare healthcare exchanges. Fox said they have been particularly active in social media, where they just finished up their “Got Insurance?” campaign, in partnership with ProgressNow Education Colorado. Using primarily Twitter and Facebook, the campaign was styled after the “Got Milk” campaign, and included staged photos of people with injuries or sickness and connecting it to the need to get insurance.

Fox said they have been pushing the message in local and national media, having 40 Colorado-specific media hits related to the “Got Insurance Campaign?” and 52 more outside of Colorado.

“It’s all about education,” said Laura Morsch-Babu, director of public affairs and community outreach at Colorado HealthOp. “We have a dedicated outreach team that has been setting up a many meetings as possible with nonprofit organizations — particularly health-related ones — around the state.”

As Healthcare.gov continues to grapple with its rocky rollout, the representatives from Colorado HealthOp and Health Republic Insurance of New York are both grateful that their experiences have been nowhere near as troubled as the national effort.

“We’re fortunate that Colorado’s marketplace has seen fewer tech issues than the federal site,” said Hutchins. The only problem Hutchins anticipates is the continuing need to make citizens aware of services. The continuous community out­reach through Colorado, combined with engaging media and marketing campaigns that educate people about the co-op, has Hutchins optimistic that Col­o­rado Health­Op will continue to grow.

For Health Republic Insurance of New York, the main challenge going forward is getting people to believe that co-ops can survive being solely nonprofit. Friedman has been active in trying to explain their model to potential customers.

“The co-op structure is centered around members and, coupled with a superior business model and lean corporate structure, makes it possible for us to deliver low rates without sacrificing the size of our network or the quality of our care,” said Friedman.

The “unknown” quantities — how many members they will have in 2014, their needs, who their providers are, etc., also worry Friedman. That said, she projected an air of confidence about their prospects going forward, particularly because of the constant outreach to the community.

“We hope to learn a great deal about our members in our first year, and use that to continue to improve our business and services,” said Freidman. “As a co-op, members are at the center of everything we do and will be actively engaged in the process of continuing to better our plans year over year.”  NPT