Regional health co-op idea moves ahead

November 05, 2010|By Larry Carson, The Baltimore Sun

Howard County is moving ahead with plans to convert a highly regarded health program for the uninsured into a low-cost regional insurance co-operative, despite the increasing pressure to reverse the national health care law that allows such an initiative.

County officials are considering the creation of small neighborhood walk-in clinics for co-op members, staffed by a salaried doctor, a nurse, a care coordinator and a clerk. Eliminating the traditional fee-for-service system could deliver care more cheaply, advocates said.

"I see multiple economies of scale," said Howard County health officer Dr. Peter L. Beilenson, who is pushing the co-op idea.

Beilenson and other county officials have received praise for the creation of Healthy Howard, a low-cost program for the uninsured in Howard. But the plan is not an insurance program and would cease to exist by 2014, when the federal law requires everyone to be insured or pay a fine. So officials are looking at other options.

While many Republicans newly elected to Congress have vowed to scuttle the federal law, the co-operative idea remains viable, Beilenson said.

Under the proposed program, salaried specialists in regional centers could consult via computer with the primary-care doctors and their patients, reducing in-person visits by as much as 70 percent, he said.

For start-up funding, the program could seek some of the $6 billion in funds available through the federal health care law passed earlier this year.

Sue Walitsky, a spokeswoman for Sen. Benjamin Cardin, a Maryland Democrat and an expert on health care legislation, said while there's been talk from Republicans about repealing the health care legislation or blocking funding for parts of the law, anything said now "is just speculation."

Beilenson's effort has support from people like Karen Davis, president of the Commonwealth Fund, a private New York group that promotes health care, and from Brad Herring, a health economist and insurance expert at the Johns Hopkins Bloomberg School of Public Health.

"I think their model is a good one," Davis said, adding that she thinks co-ops are "a relatively non-controversial idea." Herring agreed and said that "it's hard to imagine conservatives would try to limit choices in the private health care market."

Conservative experts, like the Heritage Foundation's Edmund F. Haislmaier, are skeptical, however. Haislmaier said he doesn't think a co-op is feasible.

Because the law limits the percentage of revenue an insurance company can keep, a low-cost co-op that collects less in premiums would retain less money for administrative or advertising than a for-profit company. Once start-up federal or grant money dries up, the co-op would not likely be sustainable, he argued.

He foresees smaller insurance firms and start-ups dropping out of the business or being gobbled up by larger ones, leaving the entire health care insurance field to a few firms, similar to the "big box" retail trend.

But Herring said co-ops would have an advantage. Without needing a profit margin acceptable to investors, they could use the 20 percent of revenues they can keep for expenses, not profits.

Amid the debate, Beilenson is pressing forward, using two grants totaling $175,000 to begin planning for actuarial studies and to hire a director by spring. He said no final decision on the co-op's economic feasibility would be made until late next year.

"We're very heavily in the planning process now," Beilenson said, adding that he's received a $125,000 grant from the Abell Foundation and another $50,000 from the Open Society Institute. "This is all in the planning. It's only a vision right now."

Beilenson said he hopes the insurance premiums charged by the cooperative would be lower than the cost of traditional coverage.

Health insurance for people with incomes between 133 percent and 400 percent of the federal poverty level — or from about $28,000 to $88,000 for a family of four — is expected to cost from $6,500 to $10,000 a year, even after federal subsidies, once the federal law is fully implemented. Those who decline insurance would have to pay a fine of $2,100 and would still be without coverage.

Abell Foundation director Robert C. Embry Jr., said his board voted to provide some money to study the idea for a simple reason. "People we respect felt that it would produce lower-cost insurance. It's an opportunity for Maryland to be a national leader."

But Greg Fox, a Republican Howard County Council member and a consistent critic of Healthy Howard as an expensive, underused local program, is also skeptical. "I'm not sure I would put my trust in them," he said.

Beilenson said there is much more to do before even he would be ready to attempt the program.

"If we cannot devise an actuarially sound program, we'll make a 'no-go' decision," he said.

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