Still Stumped by Obamacare? Health Co-Ops May be an Option.

Run by members, not shareholders, health co-ops might offer a strong alternative to small businesses weighing their coverage alternatives.

learn more about Arlene Weintraub

By Arlene Weintraub

melnotacho.wordpress.com
President Obama

Opinions expressed by Entrepreneur contributors are their own.

In the midst of the brouhaha over the botched rollout of healthcare.gov on Oct. 1, small business owners may have overlooked another source of affordable health plans: the new state health insurance co-operatives. These plans, which also launched on Oct. 1, are available in 23 states and are being funded through loans provided by the Affordable Care Act, commonly known as Obamacare.

If you're still looking for a health plan to put in place when the employer mandate goes into effect in 2015--or if you're too small to be subject to the mandate but want to cover your employees anyway--a health co-op may be a good option. Unlike traditional health plans offered by large insurers, co-ops are non-profit organizations that are run by their members. Initially all 23 co-ops will operate as public-private partnerships, but once they pay off their loans, full ownership will shift to their members. ("Co-op" is actually an abbreviation for "Consumer Operated and Oriented Plan.")

That operational model can offer several benefits for small companies, says Julia Hutchins, chief executive officer of Colorado HealthOP. "Our membership structure allows stakeholders, including small businesses, to have a say in how the profits are re-invested," Hutchins says. "Profits are not going to shareholders--they're going back into reducing costs or expanding benefits, and members will have a vote in how that happens."

Co-ops also tend to be more focused on promoting wellness than traditional plans are, Hutchins says. The plans Colorado HealthOP offers have built-in incentives to keep people healthy, such as the opportunity for employees to get discounts on co-pays if they perform simple preventative actions like having an annual physical exam.

There are other options for companies that want to take control of their health coverage, such as partially self-funding their insurance. But that doesn't offer as much opportunity for pooling your risk with that of other companies. Joining a professional employer organization does put you into a larger risk pool, but you'll have to hand over some control of your human-resources functions to the PEO.

Co-ops often offer as many choices of coverage as private insurers do. Arizona's co-op, Meritus, for example, has 11 HMOs and PPOs on its menu. That said, for the co-ops to work as they were initially intended, they'll have to build a critical mass of members, and that has been a challenge, says Kathleen Oestreich, chief executive officer of Meritus. "Like all insurance companies, the larger the numbers [of members] the better the risk," Oestreich says. Enrollment in Arizona's co-op was significantly impeded by the delayed rollout of healthcare.gov, even though anybody can enroll in Meritus without going to the exchange, Oestreich says. "We've been fighting a tide of confusion," she says.

Meantime, a handful of trade organizations have created private health co-ops, in response to small business owners who have been frustrated by delayed public options. One example is The Dwyer Group in Waco, Texas, which operates seven franchise companies, including GlassDoctor, Mr. Appliance, and Rainbow International, in more than 40 states. It launched a private co-op on Dec. 1 that offers a choice of three health plans, and the response so far has been "very positive," says Doug Dixon, president of ProTradeNet, the division of Dwyer that's running the co-op. "One thing we kept hearing from our franchisees was that there was too much choice out there with the Affordable Care Act and they were very confused," Dixon says. "What we did was narrow down the choices for them based on our knowledge of the types of plans that would be the best fit for them."

As for the public co-ops, the ACA initially intended to create them in all 50 states, but in early 2013, loan funding was cut during the budget negotiations. If your business is based in a state that does not offer a co-op, stay tuned. In July, Sen. Mark Begich (D-Alaska) introduced a bill that would create funding for additional public health co-ops.

Arlene Weintraub

Arlene Weintraub has over fifteen years of experience writing about health care, pharmaceuticals and biotechnology and the author of a book on the anti-aging industry, Selling the Fountain of Youth (Basic Books, 2010).She has been published in USA Today, US News & World Report, Technology Review, and other media outlets. She was previously a senior health writer for BusinessWeek.

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Leadership

How to Detect a Liar in Seconds Using Nonverbal Communication

There are many ways to understand if someone is not honest with you. The following signs do not even require words and are all nonverbal queues.

Business News

American Airlines Sued After Teen Dies of Heart Attack Onboard Flight to Miami

Kevin Greenridge was traveling from Honduras to Miami on June 4, 2022, on AA Flight 614 when he went into cardiac arrest and became unconscious mid-flight.

Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Marketing

After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.

Author Karen Inglis breaks down the strategies and tactics you need to generate awareness and sales for your self-published book.

Business News

Jake Paul and Lindsay Lohan Fined $400,000 for 'Illegally Touting' Crypto

The SEC just disclosed that eight celebrities agreed to a massive settlement without admitting guilt.

Marketing

Entice Customers to Make Additional and Larger Purchases Using These Two Tactics

With transparency, permission, and an eye on the customer's perception of value, you can knock both cross-selling and upselling out of the park.