Cooperative health plans attracted more than 400,000 Americans during the first open enrollment period and, although their long-term viability is still not guaranteed, some are bullishly plotting to grab market share from incumbents next year.
Of the 8 million individuals who bought plans through state-based and federally-managed exchanges between October and April, about five percent enrolled in one of the 23 new consumer-oriented and operated plans backed with federal loans under the Affordable Care Act, according to the National Alliance of State Health CO-OPs.
"These numbers show that CO-OPs are indeed making a real impact on the health insurance marketplaces in their states," said NASCHO board chairman Martin Hickey, MD, in a media release.
"Health insurance CO-OPs are driving innovation, competition and affordability in their individual states," said Hickley, who's also the CEO of New Mexico Health Connections, the state's co-op.
The figures released by NASCHO represent aggregate enrollment figures in the 23 states with co-op plans, and while some states and insurers have started releasing detailed enrollment data, the national picture of how co-ops and their competitors performed in attracting new members remains forthcoming.
But early indications offer hints of how the co-ops are doing across the states, with some garnering a good share of consumers and others not so much.
In Maine, as of mid-March, the co-op Maine Community Health Options was claiming an 80 percent share of the public exchange market in its competition with the other exchange insurer, Anthem Blue Cross and Blue Shield, which pre-ACA had a 56 percent share of the combined employer and individual markets.
Elsewhere in New England, the picture is different. In Connecticut, as of mid-February, the Healthy CT co-op had garnered only three percent of exchange membership, while Anthem had taken the bulk of the market (60 percent) and EmblemHealth most of the difference (37 percent), according to an analysis by the Kaiser Family Foundation.
Meanwhile, Vermont's co-op went belly-up before open enrollment even started, denied a state license after regulators found an apparent conflict of interest and financial mismanagement.
In Massachusetts, the co-op Minuteman Health has signed up only 1753 members, a bit more than half through the MA Connector, the state's troubled exchange, which has an ongoing enrollment period through this summer for consumers who've tried to apply earlier. But the co-op is bullish on its prospects to compete against the likes of Blue Cross and Blue Shield of Massachusetts, Harvard Pilgrim and Tufts Health Plan in one of the nation's most expensive healthcare markets.
"We are confident that Minuteman will prove a very attractive option once MA residents gain the ability to comparison shop, as our premiums are 25 percent to 40 percent lower than our larger competitors," the company said in a statement.
Lead by a former Cigna and UnitedHealth Group manager, Minuteman Health is also entering New Hampshire for the 2015 plan year and will be going toe-to-toe with Anthem, the only exchange insurer for 2014, in the small group and individual markets on and off the exchange.
"We think that competition among health care plans is going to be a very positive development for New Hampshire residents and businesses," Minuteman CEO Thomas Policelli. "We recognize that New Hampshire is a different market than Massachusetts, and we plan to bring the right solutions."
The track record of the only other dual-state co-op is quite promising. As of early April, CoOportunity Health, covering Iowa and Nebraska, had already surpassed its two-year goal, attracting 71,000-plus individual and small group members from on and off the exchanges.
Other co-ops, too, have seen early successes. As of mid-March, Nevada Health Co-Op was leading the state exchange's market with a 37 percent share (albeit amid considerable technical challenges in an exchange that failed to meet its enrollment goals) and New York's Health Republic was claiming a 16 percent share, second only to the 18 percent earned by WellPoint's Empire Blue Cross Blue Shield.
The ultimate challenge facing co-ops, though, may not be membership but solvency.
According to a McKinsey study, co-ops offered 37 percent of the lowest-priced plans in states where they operate and were often within 10 percent of the lowest-priced option. State exchanges with co-ops were also found to have 9 percent lower premiums on average than those without. But the sustainability of low premium pricing amid high cost trends is an open question and it's garnered skepticism from incumbent competitors.
"If there's any irrational pricing" in state markets, said Aetna CEO Mark Bertolini in a recent investors conference call, "it happened with a few of the co-ops as they went into the exchange. We, in those markets, actually withdrew from those markets as we were asked to meet co-op rating."