CO-OPs- Montana: What is a Health Co-Op, and How Does it Work?

Come 2014, Montana will have a new health insurance company, funded with $58 million in loaned seed money from the federal government.

This company is the Montana Health Co-op, which will be owned by its "members," or customers, and run by the same — as it sells health insurance to individuals, small businesses and maybe even some larger businesses.

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The co-op, which they'll spend the next 18 months putting together, will survive because it can create a good, affordable insurance product that focuses directly on patient needs and not profit, they say.

"When you have a member-governed organization that directly elects from their ranks a board of directors, it guards against any kind of inefficiencies," said John Morrison, the former state insurance commissioner and a co-op board member.

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So how will this co-op actually work? And can it survive, prosper and pay back its loans?

Within a week or so, the Montana co-op gets the first installment of its $6.7 million start-up loan from the feds: $730,000, to fund its budget for the next six months.

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The current board members have an extensive background in health care, insurance, law, marketing, public policy and private business.

Eric Schindler, a board member and Helena insurance executive, says the co-op will solicit proposals from contractors to process its claims, organize provider networks, run wellness and pharmacy programs, and perform functions that any good insurer must do.

It will get a license to operate from the state auditor's office — like any other insurer — and expects to be ready by October 2013 to start selling policies. It must offer policies on the new health insurance "exchanges," which are Internet marketplaces for insurance that begin in 2014, and plans to sell its products elsewhere, too.

The federal loans cannot be used to market their products or to finance any standalone clinic or medical staff that the co-op might want to establish.

Yet the co-op can get financing from private sources for those and other expenses, and Schindler says it already has talked to banks about this "outside capital."

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The board "is going to be very vigilant at all times, on how to save money, from provider networks to administrative costs, to the way in which benefits are structured to discourage utilization," Morrison said. "What you have is faith that they're looking after their own interests."


http://billingsgazette.com/news/state-and-regional/montana/what-is-a-health-co-op-and-how-does-it/article_3bbeba9c-48d2-5ffe-95bb-832894a7c400.html#ixzz1nbTJP6rx
Hat tip: Billings Gazette