Small-biz advocacy group pushes health insurance co-op idea in Springfield
By Meg McSherry Breslin
As policymakers and business leaders brainstorm ideas for bringing down health care costs, the concept of a health insurance cooperative is gaining more attention. The federal health care law provides competitive grants for groups to start a so-called Consumer Oriented and Operated Plan, which would act as a corporate entity overseen by a board of directors. The goal for the federal CO-OP is to provide greater choice and higher-quality care at a reduced cost.
At least one organization in Illinois, the Metropolitan Chicago Healthcare Council (MCHC) â€” an advocacy group for hospitals and other area health providers including Northwestern Medical Center, the Advocate Health Care Network, the University of Chicago Medical Center, Rush University Medical Center and more â€” has applied for a federal CO-OP grant. Meanwhile, the Small Business Advocacy Council, a Chicago group run by attorney (and erstwhile congressional candidate) Elliot Richardson, is proposing state legislation to establish a health insurance co-op aimed at small-business owners.
The SBAC has sponsors in the state House and Senate for its proposal. Mr. Richardson spoke to Crain’s about his goals for co-ops, which he said would stabilize health insurance costs while making the process of shopping for better rates more transparent.
What exactly is a health insurance cooperative? How do you envision this working?
A cooperative is essentially a self-insured entity. A large number of small and mid-market businesses come together to form it . . . and everybody in the cooperative would in essence be an owner. A cooperative would then be administered by advocates in a truly nonprofit manner. The owners and the people who administer the cooperative would set their own rules. That could entail caps on executive compensation and wellness programs to bring down rates. Basically, it would be run by our advocates in a way that stabilizes insurance premiums and provides complete transparency to the process.
Critics say health insurance cooperatives â€” modeled much like farming cooperatives â€” haven’t always worked so well in the past. What do you think might make this situation different?
You’ve got to distinguish between cooperatives and insurance pools. The insurance pools haven’t worked so well. In insurance pools, a bunch of people get together and, by the power of critical mass, try to negotiate with insurance companies for better rates. But you’re still beholden to the insurance companies in those situations.
What are some of the challenges in gaining momentum for this in Illinois?
We’ve got to get the law passed first. Last year, we tried to push through a law authorizing cooperatives, and we were able to form a coalition of many business owners and business groups. On top of that, we procured 16 co-sponsors in the Senate and the bill passed the House with strong bipartisan support, yet it was never called in the Senate. So, it’s going to take an extreme amount of public pressure and a grass-roots effort to get the legislators in Springfield to make this a priority.
The federal health care law already allows states to set up insurance exchanges, which are designed to drive down health insurance rates as well. What would cooperatives do that an exchange couldn’t accomplish?
The exchange will be nothing more than an Orbitz unless the governing body of the exchange allows it to negotiate with insurance companies. (Exact provisions for how an Illinois exchange would operate are still being debated by the state Legislature.)
What if an exchange passes in Illinois with a strong governing body? Is it less important at that point to pass a cooperative law?
The cooperative is something that could live with or without the exchange. If it sits on the exchange, it could set a baseline rate on the exchange that other insurance companies would have to compete with.
How many people are you hoping to get involved in the cooperative to make it viable?
We say 10,000 would make it viable, but we would want much more and I think we would get that. We would be looking for 100,000 people.
Why should small businesses consider this?
I think that the biggest selling point is cooperatives have worked in other states and cooperatives will stabilize rates and cooperatives will provide transparency to the process. The cooperative allows us as business owners to take matters in our own hands and get empowered.
Are you optimistic for this as early as the next legislative session?
We’re very optimistic. We did a lot in a very short amount of time in the last legislative session, and I think folks who’ve been struggling in this economy running their own businesses have frankly had it with their rates skyrocketing every year. There’s a big desire for this to pass in the business community and I believe we’re going to do this.
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