More on the non-profit Co-Op health insurance plans coming under Obamacare

One of the many (expensive) new programs within Obamacare is the establishment of co-op health insurance companies. These non-profit organizations hopefully will provide high quality health care with lower premiums because they are non-profit and are run by consumers (yup, I really said that). You can read more about these organizations in this post. HHS has issued a list of the organizations that have received a loan to get started (much like what was done with HMOs nearly thirty years ago). One of those organizations is Freelancers Union; this organization proposes to establish coverage in New Jersey and a few other states. I decided to look closer at this organization.

Here is what this organization received this year and what HHS says about it:

Freelancers CO-OP of New Jersey Service Area: New Jersey Award Amount: $107,213,300 Award Date: February 21, 2012

Freelancers CO-OP of New Jersey is sponsored by Freelancers Union, an association of independent workers that is partnering with providers with an innovative and effective Patient-Centered Medical Home model. Freelancers CO-OP of New Jersey will provide health insurance coverage statewide.

That is $107 million in loans to start a Co-Op in New Jersey. This organization already has a “non-profit” insurance company operating in New York (apparently in conjunction with Empire Blue Cross probably utilizing their network of health care providers).

From the Freelancers website:

Any health insurance company can help fix a broken arm. Ours is trying to fix a broken system. Independent workers comprise 30% of the country’s workforce, but lack the protection, benefits, and supports that traditional employees get. Launched in 2009, Freelancers Insurance Company aims to provide independent workers with high-quality, affordable, and portable health benefits. It started with a simple idea: by bringing independent workers together as a group, we’re stronger and safer than on our own. We can access lower-cost health insurance, minimize our collective risk, and subsidize each other’s health costs.

This community is the core of FIC, and as a true social-purpose insurance company, we aim to be sustainable instead of profitable. No shareholders or Board members are getting rich off of premiums; we simply want our revenues to exceed our expenses so that we can continue to offer health insurance to independent workers for years to come. The nonprofit Freelancers Union started and wholly owns FIC, and all FIC profits funnel back to Freelancers Union to provide benefits, protections, a voice, and solidarity to independent workers. We are also proud to be a Certified B Corporation™, meaning we must meet rigorous standards of social and environmental performance, transparency, and accountability.

We are now exploring new ways to innovate health care delivery for the ever-growing sector of independent workers in the United States. Our current health care “ecosystem” — the relationship between patients, providers, and insurance companies — needs to work better. Feedback from our members drives our continuous evolution, and we hope that our efforts will begin to change the way Americans think about, consume, and pay for health care in the years to come.

Great Expectations

Social orientation, non-profit, consumer operated sounds pretty good. But does all that lead to lower premiums and higher quality? The U.S. government is betting a great deal that it does, but you can be the judge. Here is a brief summary of one of the plans currently offered by the existing Freelancers insurance company in New York. This is their most expensive option, but the lower cost options have much higher deductibles and out-of-pocket costs. Some people may think that a $3,000 annual family deductible is high enough and that a $20,244 annual premium is hardly “affordable.” You can see all the details of the plans offered here.

Premium: $603/mo or $7,236 per year

w/ child(ren): $1,085/mo

w/ spouse or partner: $1,265/mo

w/ family: $1,687/mo or $20,244 per year

Deductible / Coinsurance 1: $1,500 / 20% w/ any additional family members: 2 individual $1,500 deductibles / 20%

Social entrepreneurs, non-profit status or whatever does not change reality. Take a look at this New York Times article related to the establishment of the Freelancers Health Insurance Company. It sure helps when you receive a $17 million grant to set up your reserves.

As I and others have repeatedly said, the issue is not health insurance premiums, profits or executive salaries, the issue is the cost and utilization of health care. If you still don’t accept that you are going to be very disappointed with all that Obamacare promises.

Related articles

• Freelancers Union Expands Affordable and Stable Coverage for Independent Workers (rwjfblogs.typepad.com)
• Q&A with Freelancers Union’s Sara Horowitz on Modernizing Health Insurance (rwjfblogs.typepad.com)
• Obamacare mandates CO-OP health insurance plans effective July 2013 … a new idea you say? (quinnscommentary.com)