By Julia Hutchins
Few industries have gone through as much change in the past decade as health care. Experts say many factors ranging from the cultural to the economic have driven up the cost of health care in the U.S. to the point that Americans face a collective $2.7 trillion annual health care bill. Perhaps not surprisingly, traditional for-profit insurance companies have responded over this same period by increasing rates or reducing coverage levels in an effort to appease shareholders.
In 2010, Congress passed the Affordable Care Act in an attempt to alleviate some of the financial pain for consumers. While health reform quickly became a political lightning rod, there are small pieces of the act that have garnered bipartisan support, including the “Consumer Operated and Oriented Plan” (CO-OP) provision that allows nonprofit health insurance providers that can offer competitive plans to individuals and small groups.
Colorado consumers are already seeing the disruptive power of the cooperative model in action. Just last month, the Colorado Division of Insurance released its official 2015 health insurance rates, and Colorado HealthOP – the state’s first and only health insurance cooperative – will have the lowest rates for the popular, mid-level “silver” plans in nearly all regions across the state.
While the co-op model may be new to health care, it isn’t new to Colorado. Co-ops have a long and distinguished history, particularly in the rural electricity and agriculture industries. Many experts believe that a similar co-op model will also help improve the quality and cost of health care services, particularly in Colorado’s higher-cost rural areas. And that is why we launched Colorado HealthOP in 2013 and why we are excited to continue to serve residents during this year’s open enrollment period.
Health insurance cooperatives differ from traditional insurance providers in several key ways. Cooperatives are democratic organizations that are controlled by members rather than outside investors. Our members just elected our first round of members to the Colorado HealthOP board of directors, which gives them the power to determine the priorities of the organization. We try to listen to all of the more than 14,000 Colorado HealthOP members, and our prices and benefits reflect what we heard from them over the last year.
For example, we offer plans that cover acupuncture and chiropractic care, improved mental health benefits, offer plans with three free primary care visits a year to promote wellness among our members and ensure they get the care they need when they are sick. We also offer free generic drugs for certain chronic conditions including diabetes, asthma/COPD, depression, high blood pressure and high cholesterol, so members can manage their conditions and live healthy lives — all at rates that are among the most competitive in the state.
That is possible because we partner with our members to help them take an active role in their health. By completing three preventive health actions—an online health survey, a biometric blood test and a wellness visit with a primary healthcare provider—members can receive enhanced benefits such as lower deductibles, lower out-of-pocket costs, additional primary care visits or additional drug coverage.
We also prioritize our members over profits. That means that health insurance cooperatives such as Colorado HealthOP are motivated to meet the needs of members rather than deliver financial profits. In fact, any profits that cooperatives do achieve are returned to members through lower premiums or increased benefits or services.
Another way we are able to offer affordable plans is because of several lesser-known provisions in the ACA known as the “Three R’s” – risk adjustment, reinsurance and risk corridor. Risk adjustment compensates for differences in the health of the plans’ enrollees by redistributing funds from companies with healthier-than-average customers to plans with sicker-than-average customers. This allows plans like Colorado HealthOP to embrace all of our members, including those who need care today and those who will need care tomorrow.
Reinsurance protects us against really bad luck in the form of relatively rare customers who experience truly catastrophic illnesses that result in huge expenditures. Reinsurance manages this risk by literally insuring insurance companies by using fees collected from all health insurance companies. And risk corridor is a federal program that collects money from plans sold in the new marketplaces with unexpectedly high gains and redistributes them to plans with unexpectedly high losses. Together, these three programs help ease the transition to an insurance marketplace that competes on cost and quality – and not by simply trying to attract the healthiest membership.
You can imagine the overwhelmingly positive response consumers have when their health insurance provider is guided by members instead of investors. Or when they learn that the nonprofit model translates to some of the most affordable plans in the state and that profits are returned to them in the form of additional benefits.
Simply put, when the interests of the health insurance provider and its members align, it is a transformative experience.
Julia Hutchins is the CEO of Colorado HealthOP, a new health insurance co-op that is turning health care upside down through collaboration and consumer engagement. Colorado HealthOP is a consumer-governed company committed to making health insurance more affordable for and accessible to people who need it.
Opinions expressed in Health News Colorado represent the views of the individual authors.