Oct. 1 is a big day for the Affordable Care Act, also known as Obamacare. Health insurance customers nationwide will finally begin reviewing available insurers through an online exchange and choosing from tiered insurance options before an individual insurance mandate kicks in next year. The date also marks a ribbon-cutting of sorts for 24 nonprofit health insurance cooperatives nationwide, as they start competing in a market previously dominated by private insurers. For Helena attorney and self-proclaimed "health care policy wonk" John Morrison, it's the culmination of more than two years of work.
"There's a lot of uncharted territory out there for the health co-ops and for, frankly, everybody else," says Morrison, president of the National Alliance of State Health CO-OPs. "But we'll begin to see what it looks like Oct. 1 as we see how many people come forward to use the exchanges and what insurance carriers they choose to sign up for and whether the tax credits that are offered to people below a certain income level are sufficient to create an incentive to get people to buy health coverage."
The co-ops themselves are a product of the 2010 Affordable Care Act, which mandated the establishment of at least one nonprofit health insurance issuer in every state as a bipartisan alternative to the single payer option. Some critics initially speculated that such a mandate might birth insurance cooperatives backed by hospitals or major corporations, prompting language that required each co-op be entirely governed by its consumers. The co-ops quickly attracted a variety of personalities, from business leaders to labor organizations to community activists, in what Morrison calls a "nationwide groundswell of grassroots support."
Montana was one of the first states to give rise to a co-op effort in 2011. That summer, Helena-based health insurance consultants Jim Edwards and Richard Miltenberger began discussing how to establish a state cooperative, and the duo pulled Morrison into the conversation early on. Morrison had served eight years as the state auditor and insurance commissioner for Montana. During that time, he authored two statewide health initiatives—Insure Montana, a program designed to offer comprehensive health coverage for small businesses, and Healthy Montana Kids, a nonprofit created by Ballot Initiative 155 in 2008 that offers affordable coverage for uninsured children in the state. Morrison ran unsuccessfully against Jon Tester in the Democratic primary for U.S. Senate in 2006, and his campaign became embroiled in controversy when the story broke of an extramarital affair and alleged ethical misconduct while in office.
Morrison dropped out of the news after 2008, but maintained a keen interest in influencing additional health care reform—something he calls a "hobby." Morrison, Edwards and Miltenberger became three of the founders of the Montana Health Cooperative, which was among the first seven co-ops nationwide to apply for loans through the ACA. The trio also worked to launch the National Alliance of State Health CO-OPs—NASHCO—in the interests of banding together and improving the chances of success in the new marketplace. NASHCO took the lead during negotiations with Congress, and Morrison began conducting regular Wednesday conference calls with representatives of every startup co-op in the country. Those calls are still a weekly part of NASHCO's operations.
"We knew that if there was going to be any chance of these tadpoles that are entering the stream surviving and accomplishing what we hope to accomplish, that we had to be able to work together," Morrison says. "We had to be able to share information, we had to be able to join together to achieve scaled business deals, and we had to work to serve each other's customers so consumers have good provider access wherever they roam."
If co-ops like the Montana Health Cooperative are looking forward to Oct. 1, it's in part due to the hurdles overcome so far. The ACA initially budgeted $6 billion to fund two types of federal loans for the new co-ops. Congress reduced that funding to $3.8 billion in 2011, and in the midst of last year's fiscal cliff negotiations, cut the funding again by more than $1.4 billion. The Montana Health Cooperative managed to secure $60 million in loans, and 23 other co-ops were already under contract by the end of 2012. But the fiscal cliff deal effectively halted ACA loan activity with nearly 40 other applicants waiting at the gate.
The open exchange launched next week will be the first of many tests for both the ACA and the co-ops. If successful, the co-ops could completely reshape the health insurance industry. If they fail, they'll join the ranks of other taxpayer-funded controversies like solar panel manufacturer Solyndra, which received a $535 million loan from the U.S. Energy Department before going bankrupt in 2011.
But the next few months aren't just a proving ground for the 24 established co-ops in the country. The success or failure of those opening their doors Oct. 1 could influence the decision to open funding for new co-ops down the road. And while Morrison himself will be stepping down from his NASHCO presidency next spring, he'll be keeping a watchful eye on how the co-op movement fairs in the coming years.
"If co-ops are able to offer consumers the kind of transparent, low-cost, member-governed nonprofit health coverage that they want," Morrison says, "and if they attract consumers and do well in that way, I think the funds will be restored and co-ops will continue to be launched in the rest of the states across the country."