New insurers to use co-op model

Nonprofits will bring innovative approach to Central Oregon's insurance marketplace

Dennis Thompson / For The Bulletin /

Two new insurance companies are among those preparing to vie for customers on Cover Oregon’s about-to-open health plan marketplace — part of the implementation of the Affordable Care Act — but these are not like any insurers you’ve ever seen.

They are required by law to plow any profits back into the company, either to lower premiums or improve benefits. They plan to pursue innovative policies such as allowing naturopathic physicians to serve as primary care physicians.

They are creating health plans they say will be affordable and easy to comprehend. And customers will fill most of the seats on the companies’ board of directors.

The two nonprofit companies, Health Republic and Oregon’s Health, are co-ops — an acronym for Consumer Operated and Oriented Plan. They also are, in a word, populist.

These plans function much like a credit union does in banking or an electric co-op does in utilities. Customers hold the reins, and much of the decision-making is made with the customer squarely in mind.

“Co-opsare not just another carrier,” said Dawn Bonder, CEO and president of Health Republic. “This truly poses a new way of looking at your health care and how your health care dollars are used. The idea is that health care is a public good. It shouldn’t be a profit-making business.”

Both health plans will be active in Deschutes, Crook and Jefferson counties. Health Republic has contracted to use the Providence Health Plan network throughout the state, while Oregon’s Health has signed relationships in place with St. Charles Health System and the Central Oregon Independent Practice Association, a group of physicians and health practitioners.

Origins

Co-ops are written into in the Affordable Care Act as an alternative to the “public option,” in which a Medicare-like government-sponsored health plan would have competed against private insurers in state marketplaces.

That option was scuttled from the ACA, but Obamacare instead created the co-ops, along with a program to loan seed money to the fledgling enterprises.

The plan had been to see at least one co-op in all 50 states, but that notion was quashed when the seed funding got cut during January’s fiscal cliff battle.

Twenty-four co-ops had been approved with funding secured prior to the program’s demise, however, and those have been allowed to go ahead. Oregon is the only state with two active co-ops, and both say they are ready to do business when the Cover Oregon marketplace opens for business on Oct. 1.

“We are licensed, accredited, experienced, well-funded and ready to go,” said Dr. Ralph Prows, CEO of Oregon’s Health CO-OP. “We have claims reserves that are five times the required statutory minimum. We’re here for the long term.”

The two Oregon co-ops have very different origins.

Health Republic initially was sponsored by the Freelancers Union, a group that advocates for the rights of the self-employed, Bonder said.

“They have a strong investment in helping people who normally have had difficulty getting benefits,” she said. The Freelancers Union also helped sponsor co-ops in New York and New Jersey.

Oregon’s Health began as an effort by Care Oregon, the largest Medicaid carrier in the state, which saw the potential for a co-op to help people on the edge of poverty who “churn” on and off of Medicaid as jobs come and go, Prows said. That can leave coordinated care organizations — networks of providers who try to manage patient care together — struggling to keep patients healthy.

“The Medicaid providers and the CCO organizations invest in those members and try to coordinate their care, but when they leave the Medicaid plan it all falls apart,” Prows said. “About 20 to 30 percent churn two or three or four times a year, and typically when they come back into the CCOs, their claim costs are twice as high as when they left.”

Oregon’s Health will welcome any new customers, but hopes to make it easier for that coordination of care to be transferred when a patient goes from Medicaid to the co-op or back again, Prows said.

Consumer focus

Despite their different beginnings, both companies share the same focus on consumers. They say they have created health plans designed to address common complaints people have about “typical” insurance plans.

For example, Oregon’s Health will allow a person to use a naturopathic physician as a primary care doctor, something not usually allowed by health plans.

“We heard consistently that people received a level of health and wellness coaching and preventive care coaching from naturopaths that they don’t necessarily receive from other providers,” Prows said. “In Oregon, naturopaths can be licensed to practice primary care, so we have built the criteria that will allow us to credential naturopathic physicians.”

This stance places Oregon’s Health on the cutting edge of health care, said Laura Farr, executive director of the Oregon Association of Naturopathic Physicians.

“From our perspective, they are absolutely demonstrating the kind of innovation that Gov. Kitzhaber has demanded,” Farr said. “Naturopathic physicians specialize in preventive medicine. At this time, when every decision maker in the state says we need to focus on prevention, it only makes sense to put naturopathic physicians on the front line.”

Both co-ops also say they have addressed complaints regarding the often bewildering cost-sharing arrangements of health plans — copays, coinsurance and deductables. Their plans will feature fixed copays for most services.

“You pay a lot of money in premiums, and then you keep paying money after you’ve paid a lot of money in premiums,” Bonder said. “It’s really hard to budget what your health care is going to cost in a year. So we designed a plan under which, at the end of the day, you will know exactly the least amount of money you will pay for health care and the absolute most you will pay.”

The big challenge now is getting their names out there. Health Republic hopes to insure 15,000 people in its first year, while Oregon’s Health would like to sign up about 34,000.

“The whole idea of health plans that express the voice of the consumer in a very direct way and health plans that embody the idea of helping your neighbor, I think that resonates very well in this state,” Prows said. “It’s the key piece that’s been missing for a very long time.”