Buried among the Affordable Care Act’s thousand pages is a small section about a different health care option—a cooperative (a consumer-oriented and operated plan).
“The whole point of a cooperative is to get the best product to the consumer and make our consumers healthy rather than make money,” Charles Holum said.
Holum, a Park Hill resident and attorney in Denver, helped found Colorado’s first and only health co-op, Colorado HealthOP, which will be included on the health care exchange website that opened to consumers starting in October.
A health cooperative is an alternative public option. It is a nonprofit insurance company initially funded by low-interest federal loans. Although co-ops are government funded, they are not government controlled. Loans must be paid off, and members elect the board of directors and can help manage the program.
Because there is no profit motive, co-ops are supposed to provide better coverage at lower rates. Those rates are intended to compete with for-profit companies and lower the overall increasing costs of health insurance in the U.S.
Health co-ops first began in the New Deal when Franklin D. Roosevelt created a set of programs to get the U.S. out of the Depression. The Federal Farm Administration established co-ops to bring health insurance to rural parts of the country traditionally underserved.
Most of the health co-ops from the 1940s went out of business, but two major ones still survive, Group Health in Washington and HealthPartners in Minnesota.
In 2010, Sen. Kent Conrad of North Dakota became a leading proponent of adding co-ops into the Affordable Care Act. A provision was passed to award federal loans and grants to cover startup costs for co-ops, and now 24 states have federally funded co-ops set to offer plans beginning October 1.
Colorado is among those 24 states.
When Charles Holum first learned about health cooperatives in the spring of 2011, he became enthralled with the possibilities.
Holum has lived on the edge of the health care world. His wife is a doctor, and he has done work with agricultural organizations on health care issues. He says the current system is a mess. “Health care costs and the amount of money that people are trying to extract out of the health care industry are horrifying,” he said.
Holum and five friends also frustrated with the current system started discussing the need for a different insurance product. “We all grabbed on to this to do something good that made sense in health care, regardless if we got any money from it,” he said.
Inspired to help reverse spiraling health care costs, the group traveled the state to see if anyone was starting to set up health cooperatives. They particularly found a need for them in rural areas of Colorado where insurers have fled the market.
“No one we could find was doing one (cooperative) so we thought, okay, we’ll do one.”
The Rocky Mountain Farmers Union sponsored the group, and in July 2012, they received $69.5 million in federal loans—$12 million of which is meant to start the business and $57 million to pay insurance claims.
Now the co-op idea has transformed into a licensed health insurance company, Colorado HealthOP, with more than 35 employees. “When we first started talking two years ago, it was like ‘Oh wouldn’t it be amazing if we could do this.’ I never imagined personally being involved in starting a health insurance company. It’s a novel experience,” Holum said.
Colorado HealthOP has a network of doctors and providers in Colorado, which Holum said will expand throughout the years. They aim to provide plans with lower premiums, more benefits and better quality.
Critics say co-ops likely cannot lower health care costs in the U.S. and will not be able to survive in the competitive marketplace. But according to Holum, companies have filed their rates and Colorado HealthOP is a competitive player.
Colorado HealthOP is among many insurance options in the new exchange. Colorado leads the nation in the number of plans and providers, which Holum is proud of, but says it may be overwhelming for people. “It’s still going to be confusing because people haven’t shopped for health care before. But the assistance they can get through different organizations and the insurance companies will help them through that, and they shouldn’t be afraid to ask the navigators.”
Like the Connect for Health Colorado website, Colorado HealthOP provides an online calculator to show subsidies, tax credits and premiums.