Of the 24 federally-supported cooperative insurers, one is off to a somewhat disruptive start in the Blue Cross-dominated insurance markets of Iowa and Nebraska.
In its first open enrollment period, the West Des Moines, Iowa-based CoOportunity Health signed up some 70,000 new members in the two states, exceeding the company's initial predictions and posing a new competitive if not existential threat to Blue Cross incumbents, who in both states have more than 50 percent market share.
Originally called Midwest Members Health, CoOportunity Health was started by veterans of Iowa's healthcare industries -- David Lyons, a former Iowa Insurance Commissioner and development officer at the Iowa Farm Bureau Federation, and Cliff Gold, a former senior VP at Wellmark Blue Cross and Blue Shield of Iowa and South Dakota.
Gold retired from Wellmark in 2008, launching a management consultancy and moving to San Diego. He was golfing one day when he got a telephone pitch of the idea to start the co-op from Lyons, who as head of the farm bureau was one of Wellmark's largest clients.
Gold was lured out of retirement in part because he wanted to help offer a new consumer-focused insurance experience, he said, after leaving the industry feeling that some nonprofit insurers had "strayed from their mission." Now as COO, he's using a mix of old and new techniques to run the organization.
For CoOportunity Health, the mission of being member-owned and operated did not necessarily mean offering the lowest premiums in the market, as Aetna and other executives at national insurers have said of the co-ops. But in many places CoOpportunity Health plans were the lowest-priced.
In Iowa, contending with only one other individual market competitor on the public exchange, Aetna's Coventry, "our prices were 2 to 20 percent higher depending on the area," Gold said. For group rates on and off the exchange in Iowa, though, "we were arguably the lowest cost by 3 to 5 percent."
In Nebraska's public exchange, contending with Coventry and Blue Cross and Blue Shield of Nebraska, CoOportunity had the lowest premiums in three of the four premium rating areas but the highest in greater Omaha. In the open group market, it had the lowest premiums, he said.
Across the two states, which have a combined population of 5 million, CoOportunity is now covering about 50,000 members on individual plans and 20,000 members through 1,400 group plans, thanks in part to a deal with brokers.
The co-op also just booked it first large employer client with 1,000 lives, although the large group "is not a primary market for us," Gold said. The small group was something they really wanted to tackle; those "markets have needed new competition," he said.
CoOportunity Health is offering both broad and limited network options (with narrow networks available only in Iowa), giving potential customers lower-price options as well as a range of provider choices. "We will never offer a narrow network without a broad network," Gold said.
Of the new individual members who had a choice, 41 percent chose the narrow network plans, 38 percent choose the tiered network plans and 21 percent chose the broad network -- although among the group clients, 86 percent chose the broad network.
This suggests that individual buyers are "clearly willing to sacrifice network and benefit levels for price," Gold said.
Creating a new insurer with a $14 million federal loan for startup costs and a $98 million loan for solvency, spending could pose a challenge, especially with year-one membership almost triple the 25,000 that was expected.
To keep overhead low, CoOportunity outsourced enrollment, claims and customer services to HealthPartners, the nation's largest consumer-governed health plan and health system. Using HealthPartners as an administrator was so important to Gold that he told federal regulators they would reconsider launching the co-op if it wasn't approved.
That lets CoOportunity Health focus on branding itself as a "new kind of insurance company," setting up a wellness incentive program -- $100 for members who take an online risk assessment and get a preventive visit -- and creating processes for members to get involved.
The organization now faces the challenge of sustainable financing in the long-term, like other co-ops. While some have a risk of going belly up, "I think the vast majority will make it," said Gold.
He has been approached by groups in other states asking to extend CoOportunity Health, since Congress cut off the remaining funding for co-op loans and left about half of the states without one. "We want to make sure we get Iowa and Nebraska right before considering expansion, but down the line we would consider it," Gold said.