New health insurer to use $62 million loan for ‘consumer-operated’ coverage

Posted Aug. 10, 2012, at 5:43 p.m.

A new consumer-run health insurer will begin selling policies to small businesses, families and individuals in Maine in 2014.

Maine Community Health Options is a private nonprofit known as a “consumer operated and oriented plan” that will be governed by its policyholders, much like a mutual insurance company. It’s one of 12 “co-op” health plans across the country funded under the federal health reform law.

In March, the Maine nonprofit won a $62 million loan from the federal Centers for Medicare and Medicaid Services to develop the co-op and fund a reserve, or a pool of money dedicated to paying claims.

The co-op will use any profits to benefit its members, such as by lowering premiums or improving benefits. Its aim is to give Maine consumers an affordable health insurance option, especially those going without health coverage or at risk of losing their coverage.

The challenge for these co-ops will be in attracting enough consumers to buy into the plans to make them work financially without relying on federal money.

The co-op will help its policyholders improve their health care, while also making medical treatment more cost efficient, said CEO Kevin Lewis.

“We’re engaging people to improve health outcomes and maximizing the benefit they can get out of their coverage, and also reducing the total cost of care,” he said.

Maine Community Health Options will begin selling policies in January 2014, with enrollment beginning in the fall of 2013. The plan would be offered both on its own and through Maine’s health insurance exchange, an online marketplace where consumers will be able to shop for health coverage by 2014, Lewis said.

The future of the exchanges, mandated under President Barack Obama’s Patient Protection and Affordable Care Act, remains unclear. A number of Republican governors, including Maine Gov. Paul LePage, have resisted setting up exchanges, though the federal government is likely to step in to carry them out.

Some Republicans in Congress have also moved to defund the loan program, questioning the $3.4 billion in loans doled out to get the health co-ops off the ground. In an April letter, House Republicans on the Committee on Energy and Commerce noted that many of the loans are expected to default.

To succeed, the co-ops have to convince doctors and hospitals to provide care to their policyholders. The Maine co-op has had encouraging discussions with a number of health systems, independent hospitals and community health centers across the state, Lewis said.

The health co-ops also have to attract enough people to buy their policies and give the co-op sufficient clout to negotiate prices with providers.

“The subscriber base is critical to us being able to pool risk,” Lewis said.

Maine Community Health Options has set a goal of 50,000 members, he said. As it pays the federal loan back, the co-op plans to increasingly sustain itself on money from members’ premiums. Provisions of the federal health reform law also help co-ops manage their risk, he said.

The co-op has received no state money, Lewis said.

Officials with Maine Community Health Options and the Centers for Medicare and Medicaid Services have scheduled a news conference next Thursday in Lewiston to share details about the federal loan and the co-op’s health plans.

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