2013
From the New York Times, June 16, 2013:
The consumer-operated plans, known as co-ops, are also expected to put pressure on other insurers to hold down prices. “We don’t have to return money to stockholders on Wall Street, like for-profit insurers,” said Jerry Burgess, the chief executive of Consumers’ Choice Health Plan, the co-op established in South Carolina.
He says the insurer expects to charge little more than the actual costs of its medical care and will lower its premiums if possible. “We would see an opportunity to gain market share by lowering our price,” Mr. Burgess said. “That’s exactly what health reform hopes will happen.”
The fact is a substantial portion of health insurance is already provided by non-profit health plans and has been for years.
“… charge little more than the actual costs of its medical care?” That little more still must cover all administration, overhead and reserves. That means even in the ideal scenario, we are talking about a variable of perhaps 5-7%. In my experience working with several non-profit HMOs many years ago (all of which eventually went out of business), the lack of a profit motive can sometimes lead to inefficiency, lack of attention to strategic planning and lack of accountability… not unlike a government bureaucracy.
Only time will tell if non-profit co-ops can deliver on their promises of sustained lower costs. One major determinant will be their ability to attract an actuarially sound enrollment base. Marketing as the lowest cost plan among many options may make that more difficult.
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