When the revolution comes, I’ll be in a CO-OP

If you’ve only been thumbing through recent headlines about health insurance consumer oriented and operated plans (CO-OPs), you couldn’t be blamed for thinking the program is on the ropes. CoOpportunity Health, the CO-OP plan in Iowa and Nebraska, failed at the end of last year; state insurance regulators took control and moved to liquidate the plan when it was deemed financially insolvent. Other reports have speculated that other CO-OPs may face similar fates.

But this perhaps inevitable emphasis on the negative aspects of a federally spawned program misses the forest for the trees. CO-OPs reflect a fundamental reorientation of the relationship between plan and patient, one of the scarce revolutions in our system going on that truly merits the title “health reform.”

{mosads}By law, CO-OPs are member-directed and true nonprofits. What that means is our boards are not solely comprised by well-heeled executives and industry insiders. They are populated by our members – the people our plan serves. This is a real and powerful deviation from status quo health plan practice. Instead of an overarching emphasis on profit margins, our board is devoted to the wellbeing and consumer experience of our members. Instead of getting too caught up in policy trends and shiny vendor pamphlets, they consider the practical implications – especially to cost and health – for our enrollees.

And the market is responding. This year, Colorado HealthOP has over 75,000 members enrolled in our individual market health plans. That’s an over 40 percent share of the individual Exchange market, quite a bit considering we launched only a little over a year ago. This has also made us the “benchmark silver plan” for purposes of calculating subsidies for Exchange enrollees in all counties save one, putting us in the driver’s seat to reduce healthcare costs and premiums statewide. Rates in the individual market in Colorado rose less than one percent from 2014 to 2015. Yes, we are taking some credit for that.

It is in our DNA to prioritize quality and value via evidence-based approaches to care. For example, our members receive enhanced benefits if they take three critical steps to manage their health: (1) complete a health risk assessment; (2) get a biometric screening; and (3) come in for their annual wellness visit. We don’t charge out-of-pocket for primary care visits, mental healthcare or generic drugs for certain high cost conditions and leverage “extension agents” in rural areas to ensure basic preventive and primary care needs are met in those regions. These are bona fide investments in health and they are already paying dividends.

To be sure, all is not hunky-dory in CO-OP land. We are start-ups. That means we have growing pains. Capital is not always easy to come by. At our outset, we were dependent on Federal loans to cover costs and ensure adequate solvency reserves. The vast majority of the funding initially allocated to CO-OPs was cut by Congress to offset other spending. In fairness to them, those cuts were enacted before our plans really took off in our markets: they knew not what they did, you might say. But we have been forced to modify our business plans, to say the least, to overcome these unexpected turns.

The good news is there are some very modest policy steps the Federal government could take that would go a long way to easing the financial challenges some CO-OPs now face. Relative to the multi-billion dollar bait-and-switch we’ve experienced, where future funding was pulled out from under us, we think these solutions are practical, actionable, and would have only nominal impacts on the Federal ledger.

Apologies that these issues quickly get esoteric, but one relatively straightforward action the Administration could take would be to allow us to convert our “start-up” loans to “solvency” loans. The amount of money wouldn’t change; we’d simply be able to use those dollars to meet state and Federal financial reserve requirements. That’s something we can’t currently do thanks to outdated restrictions in the CO-OP program.

Further, the administration could allow us to “bank” future receivables under the federal reinsurance program to ease our access to private, third party sources of capital. Paradoxically, perhaps, our initial reliance on federal dollars has substantially restricted our ability to become self-sufficient by finding new partners and funding sources. This one change would go a long way to remedying that inefficiency in the CO-OP program.

At Colorado HealthOP, we pride ourselves in being “CO-OPy.” That means we use scientifically valid approaches to improving care; it means we actively pursue – not passively avoid – underserved areas and populations; and it means every day we build a creative, entrepreneurial approach to solving problems. But, most of all, it means our first priority is and always is our members. In case you didn’t know, that’s something new, a revolution even. And it’s worth hanging on to.

Hutchins is the CEO of Colorado HealthOP.