by Julia Hutchins, CEO of Colorado HealthOP, Colorado’s consumer operated and oriented health plan. Colorado HealthOP will be a 2014 plan choice for Coloradans starting in October.
Consumers in Colorado and 25 other states will soon have a new opportunity to buy health insurance through consumer-governed health plans. These non-profit, consumer operated and oriented plans, or CO-OPs, enable consumers to have a voice in the way the companies are run.
While CO-OPs have long been a part of the farming industry and food CO-OPs are common across the nation, the CO-OP philosophy is a relatively new entrant to the health insurance marketplace.
So why is this a big deal?
The short answer is: consumer-run CO-OPs have the potential to fundamentally change the value of health insurance and the role it plays in people’s lives.
It is no secret that health insurers hold the purse strings that fuel the health care industry. They make decisions every day about who gets coverage, what benefits are covered and how services are covered. These decisions are heavily impacted by governance structure and associated business purpose. Delivering profit to shareholders is the dominant criterion for decision making in for-profit enterprises.
CO-OPs, on the other hand, exist to maximize economic and social (happiness, health) returns to their members. This philosophy is different even from non-profit organizations, which exist for social purposes that may be broader than or distinct from the interests of their membership.
Using these criteria, consider how governance structure might lead to different decisions when considering whether to cover preventative dental services for children under 3 (sealants and fluoride treatment):
- For-profit: Probably not. Coverage is unlikely to deliver short-term profit.
- Non-profit: Maybe. The decision depends on the organization’s social mission.
- CO-OP: Yes. Tooth decay is a leading chronic disease in children. Covering this benefit is good for members’ health and saves members money in the long run.
While some might argue that making decisions that balance economic and social returns could be difficult for a consumer-operated board, it is something we all do every day. In fact, CO-OPs are actually better positioned to address both the affordability and the value of health insurance because of the unique economic and social relationship among the board of directors, the CO-OP’s management and the CO-OP members.
Can a consumer-governed company sit back and accept a 20 percent uninsurance rate or a 10 percent annual increase in medical inflation? It is not as easy for a CO-OP as it might be for another carrier to simply pass these costs on to its membership. Because the board and the management answer to members, and not to shareholders, their priorities have to shift. And that’s not a bad thing.
As CO-OPs become available to consumers across the U.S. – and here in Colorado – in 2014, the power dynamic of the health insurance industry will begin to shift – returning consumers to the driver’s seat and elevating better health and lower healthcare costs above all.