Co-op part of a new approach to insurance
Nonprofit will eventually be overseen by board of its members
CHAMPAIGN — If you're looking at your insurance choices in Illinois' new health marketplace, one company offering coverage, Land of Lincoln Health, might look a bit unfamiliar.
The state's only nonprofit co-op insurer, Land of Lincoln is new this year.
It's one of the so-called consumer-operated and -oriented plans, or co-ops, created under the Affordable Care Act.
There were about two dozen co-ops launched with about $1.9 million in federal loan funding — before budget reductions sank plans for more co-ops in other states — with the hope that they'll stir up competition and lower insurance rates for everyone.
Land of Lincoln, backed by $160 million in federal loans, has 35 full-time employees and 35 insurance plans for individuals and small businesses to compete throughout Illinois with Blue Cross and Blue Shield in the state-federal marketplace that opened Oct. 1. Regionally, Land of Lincoln is competing with Health Alliance Medical Plans, Aetna, Humana and Coventry.
Jason Montrie, Land of Lincoln's vice president for channel and network development, said the company aims to pick up 40,000 members its first year and is building for the long term.
With enrollment still in early weeks and access delays on the federal website, Montrie said it's too early to make progress projections.
But he does say Land of Lincoln has gotten an "overwhelming" response from insurance shoppers and brokers since its roll out.
"We've been very excited about the response we've gotten so far," he said.
Some things to know about co-ops:
Under the Affordable Care Act, all health plans — offered by traditional insurers and co-ops alike — must offer the same essential health benefits.
Two factors distinguishing co-ops:
— They must operate as not-for-profits, with any excess revenues reinvested to improve benefits and reduce premiums for their customers.
— They're governed by their customers, to ensure they meet the needs of the people they ensure rather than profit-seeking boards.
Land of Lincoln's formation board is largely made up of business and health care executives, and is chaired by Kevin Scanlan, the president and CEO of the company's sponsoring organization, the Metropolitan Chicago Healthcare Council, a Chicagoland health care trade group.
"In 2014, we'll be looking for a board of our members," Montrie said.
In sponsoring Land of Lincoln, the Metropolitan Chicago Healthcare Council expressed hope that a co-op would lower prices for consumers and provide people with a new insurance model that would be 100 percent focused on its customers.
One of the Land of Lincoln's goals is simplifying the entire insurance experience for consumers, Montrie said.
To make the information simpler, Land of Lincoln partnered with Northwestern University Feinberg School of Medicine and Emory University. The company still uses common insurance lingo, Montrie said, but common terms such as "coinsurance" and "deductible" are defined in a glossary on the company website.
The website also includes educational sections about such things as what health insurance actually is, why it's needed and why it doesn't cover 100 percent of medical costs.
"There are a lot of opportunities for the improvement of health literacy in our industry," Montrie said.
Land of Lincoln was the last state co-op approved before federal budget cuts, he said.
There are now 23 co-ops selling health plans for 24 states, though a co-op in Ohio wasn't licensed soon enough to sell plans in the federal exchange for next year.
The federal government lent co-ops money for startup costs and reserves needed to meet state solvency requirements, with startup funds to be repaid over five years and solvency loans to be repaid over 15 years.
Land of Lincoln received about $16 million in startup funds and $144 million in solvency funding, Montrie said.
Land of Lincoln is selling its health plans both in and outside the state marketplace and is available statewide through a provider network rented through HealthLink. The company has also contracted with Catamaran Corp. to manage its pharmacy benefits.
With enrollment slowed down for everyone through the federal website, it's too early to get a clear picture yet of how popular the co-ops are in their states, said John Morrison, president of the National Alliance of State Health Co-ops.
However, he contends they're already having their desired effects on insurance rates.
An analysis commissioned by NASHCO found states with co-ops have insurance rates that are approximately 9 percent lower than those without, he said. And while there hasn't been more study looking into those findings, he added, "that much variation is a pretty clear indication."
Co-ops will have opportunities to lower rates in their states because they're consumer-governed, "so the policyholders that will be paying the premiums will occupy a majority of seats on the boards," Morrison said.
These boards won't be motivated to make money. They'll be motivated to provide the best health for the money, he said.
Morrison also looks for consumer-driven co-ops to drive health system reforms that have been widely accepted from a policy perspective but haven't been widely implemented in health care. Innovations may be phased in over a few years, he warned, because co-ops have had their hands full starting entire companies from scratch in the past year.
"And that has required that they make agreements with service providers and health care providers faster than they might like to," he said. "But over time, they'll be able to work with these service providers and health care providers to be able to develop individually tailored agreements that are more innovative."
Montrie said Land of Lincoln has been in more than 50 communities listening to what people have to say, and is focused on delivering solutions.
Co-ops are prohibited from spending their federal loan money on marketing, but Land of Lincoln plans to continue its community education and outreach efforts, he said.
Want a look at Land of Lincoln's health plans and having trouble getting into the federal website? Land of Lincoln is encouraging people to view its plan offerings on its own website, http://www.landoflincolnhealth.org.
The company can help people purchase plans online and over the phone, said Jason Montrie, a Land of Lincoln vice president, but anyone who qualifies for a federal subsidy to help pay for coverage will be connected to the federal website to apply.
Land of Lincoln Health facts
What: A nonprofit consumer-operated and -oriented plan, or co-op health insurer, launched this year under a provision of the Affordable Care Act with a $160 million federal loan.
Offering: 35 health insurance plans in the state marketplace, Get Covered Illinois. Plans are also sold outside the marketplace.
Provider network: Contracted statewide through HealthLink Open Access.
Sponsoring organization: Metropolitan Chicago Healthcare Council.
Formation board, to be replaced in 2014 by board of co-op members:
Daniel Yunker, CEO of Land of Lincoln Health and professor of finance at University of Illinois at Chicago's master of health care administration program.
William Donahue, president of Land of Lincoln Health.
Chairman: Kevin Scanlan, president and CEO of Metropolitan Chicago Healthcare Council.
Vice Chairman: Juan Salgado, president and CEO of Instituto del Progreso Latino.
Treasurer: Vincent Pryor, chief financial officer, Edward Hospital and Health Services.
Secretary: Laura Minzer, executive director, Illinois Chamber of Commerce Healthcare Council.
Brent Estes, president and CEO, Rush Health.
James Gillespie, president and founder, Center for Healthcare Innovation.
The Rev. Marshall Hatch Sr., senior pastor, New Mount Pilgrim Missionary Baptist Church.
Melinda Kelly, executive director, Chatham Association Small Business Development.
John Carpenter, executive vice president and chief operating officer, Chicagoland Chamber of Commerce.
Jason Sciarro, president and chief operating officer, Centegra Health System.