By Barbara Pash
A new statewide group is trying to form a new insurance co-op to provide coverage for people who will be required to have it under the new federal law, but cannot afford it.
The Maryland Nonprofit Health Insurance Co-op is working on a year-long feasibility study to see if it will be able to start its own insurance carrier for those who cannot afford even the cheapest insurance. The proposed co-op would target adults between 19 and 64 living in the state’s I-95 corridor.
By next July, “we should know if it’s a go or a no-go,” said Dr. Peter Beilenson, the Howard County health officer and chairman of the co-op’s steering group.
Even though the federal law is supposed to give health insurance access to all, Beilenson said, “there is not going to be affordable access for everyone. Working class families are still going to have a hard time affording health insurance.”
Steering committee member Kathy Westcoat, president of Baltimore Health Care Access, said that creating a co-op is “another creative way to ensure that people have coverage. And it will create some competitiveness in the market.” Westcoat’s nonprofit group administers Medicaid and other programs for vulnerable populations in Baltimore.
Co-op organizers have not yet determined how it will offer insurance. Ideally, Westcoat said the co-op would not be part of the “commercial mega-insurance company world.”
“The goal is to personalize health care coverage and to have unique places where people could access [community-based, primary health care] services, such as in storefronts,” she said.
It’s possible, Westcoat said that “one of the outcomes [of the feasibility study] is that this won’t work.”
The new federal health insurance law has a provision allowing for the formation of state-wide nonprofit health co-ops, with $6 billion set aside for start-up grants.
The co-op is planning to apply for a federal grant because “no foundation has that kind of money,” Westcoat said. The steering committee is looking for seed funding from area foundations as it forms work groups of medical, public health, legal and marketing professionals to explore the options.
Estimates indicate the co-op would need $100 million to $150 million in reserves to start. Beilenson believes that the co-op needs to enroll 50,000 to 100,000 people to be economically viable.
The federal law establishes qualifications for government-subsidized insurance coverage. Adults making below 133% of the federal poverty level will qualify for Medicaid. Those who make 134 to 400% of the federal poverty level will get subsidies for insurance coverage.
However, Beilenson said, some people will not be able to afford the premiums — even with subsidies. He fears people in that circumstance will instead choose to pay the $2,000 penalty for not having health insurance. The co-op could be a less expensive option that would still allow people to be covered.
UPDATE: Health insurance co-ops have already formed in Wisconsin, Washington state and Minnesota. According to the National Cooperative Business Association, the main two cooperative health care organizations are Group Health in Washington state and Minnesota-based HealthPartners, which also serves Wisconsin.
Robert Connolly, president of the Wisconsin Health Care Cooperative, said, “You are your own insurance company. So, in your state, your region, you are competing with for-profit insurance companies. It’s quite an undertaking, and it hasn’t been tried before.”
After two years of planning and research, Connolly believes that nonprofit insurance companies can succeed. “But you have to reach a certain scale of members quickly, and you have to have the capital and resources to cover them,” he said.