The Clinton Herald, Clinton, Iowa

National News

April 3, 2014

Nonprofit insurers struggle in new marketplaces

HARTFORD, Conn. — A smorgasbord of options and lower prices for consumers were two of the chief selling points for President Barack Obama as he promoted his overhaul of the nation’s health insurance industry, predicting Americans would see “competition in ways we haven’t seen before.” Companies were even started as a way to encourage innovation and competition, namely 23 consumer-run, co-op insurers created with the help of $2 billion in federal loans.

But rather than promote competition, the co-ops and smaller nonprofits in some states have languished behind major insurers, attracting in some cases minuscule shares of the market. While Obama celebrated an early projection this week of 7.1 million enrollees under the Affordable Care Act, it’s too early to say whether the law ultimately will foster sufficient competition to keep premiums and deductibles affordable for consumers.

Many of the nonprofit insurers are startups and have faced challenges as they tried to attract customers, including: the computer problems that plagued many of the signup websites; plans that weren’t priced to compete; and a failure to develop brand recognition, due in part to restrictions on advertising and lobbying that were a condition of the co-ops accepting the federal funding.

“Between no lobbying and no direct marketing, that’s what you get,” said Ken Lalime, CEO of HealthyCT, a co-op in Connecticut. “It’s kind of tough to get your name out there and get exposure.”

Like nonprofits in other states, HealthyCT watched in recent months as customers chose big-name insurers on the marketplaces created under the federal health care law. Before Monday’s enrollment deadline, HealthyCT had 3 percent of signups in the state.

Just 5 percent of enrollees in Washington state’s marketplace had chosen community nonprofit insurers by the end of February. In California, more than 95 percent of people signing up for coverage went with four major insurance companies rather than seven regional or community nonprofits. About 97 percent of Oregon’s enrollees have selected plans offered by the larger insurers in the state while 3.3 percent chose the two co-ops. In New Mexico, an estimated two-thirds of those signing up selected one of three major insurers. And through February in North Dakota, where Blue Cross Blue Shield had 80 percent of the market before the law went into effect, just 516 people chose coverage offered by the nonprofit Medica.

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