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Obamacare created 22 new health insurance plans. Can they succeed?
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/11/obamacare-created-23-new-health-insurance-plans-can-they-succeed/Along with the FQHC expansion, I think the co-op provisions (especially risk adjustment) are some of the most underrated parts of PPACA, and they could have very good results.
The Consumer Operated and Oriented Plans, or Co-Ops, are a small part of the health care law that could have big implications for its success. Nonprofits in 24 states have received over $2 billion in federal loans to essentially start new health insurance products from scratch. And the health care observers I talk to think that these plans have the potential to upend the health insurance market — or end up as the next Solyndra.
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The co-ops were the brainchild of former senator Kent Conrad of North Dakota. They were meant to offer something of a replacement for the public option when it was clear a government-run health plan wouldn’t have the political support to move forward. The co-ops would all be nonprofit health plans that, in theory, would push their private competitors to lower their insurance rates. And they would get start-up loans from the federal government, significantly lowering the hurdle to enter the insurance market.
Twenty-five co-ops received grants from the federal government before Congress cut off funding for the program as part of a larger deal to avert the fiscal cliff in January. Come October, 22 of those plans will be selling on the marketplaces. Ohio’s plan has not yet received certification to sell from its state insurance department, and Vermont’s was rejected by a state agency, which questioned its ability to repay the government loans.
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Another element that makes the co-ops unique is the type of customers they hope to entice. While insurers have typically tried to lure in the healthiest subscribers, who would file the fewest claims, co-ops generally seek out the riskier, sicker people. They have a good reason: The health care law includes something called risk adjustment, which requires the health plans with super healthy subscribers to transfer some funds to those that have really sick customers, in other words, the plans that the co-ops might use.
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The co-ops were the brainchild of former senator Kent Conrad of North Dakota. They were meant to offer something of a replacement for the public option when it was clear a government-run health plan wouldn’t have the political support to move forward. The co-ops would all be nonprofit health plans that, in theory, would push their private competitors to lower their insurance rates. And they would get start-up loans from the federal government, significantly lowering the hurdle to enter the insurance market.
Twenty-five co-ops received grants from the federal government before Congress cut off funding for the program as part of a larger deal to avert the fiscal cliff in January. Come October, 22 of those plans will be selling on the marketplaces. Ohio’s plan has not yet received certification to sell from its state insurance department, and Vermont’s was rejected by a state agency, which questioned its ability to repay the government loans.
...
Another element that makes the co-ops unique is the type of customers they hope to entice. While insurers have typically tried to lure in the healthiest subscribers, who would file the fewest claims, co-ops generally seek out the riskier, sicker people. They have a good reason: The health care law includes something called risk adjustment, which requires the health plans with super healthy subscribers to transfer some funds to those that have really sick customers, in other words, the plans that the co-ops might use.
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