Several minutes into "Monty Python and the Holy Grail," two men wander through a medieval village. "Bring out your dead," they shout as they pull a cart of plague-stricken corpses.
One resident offers a corpse, but the collectors quickly discover he's not dead yet. "I feel happy, I feel happy," he sings in an halfhearted effort to convince everyone he won't be dead by Thursday. "I think I'll go for a walk now."
Eventually, the increasingly frustrated collectors whack the man in the head with a club, add him to their cart and head on their way.
The scene came to mind when I saw the latest expert report on the Affordable Care Act's consumer operated and oriented health plan (CO-OP) program. Are CO-OPs dead yet, or do they feel happy? Unfortunately, answering that question is tricky.
That report comes from the Commonwealth Fund, which found some CO-OPs thriving and others struggling. That builds on previous reports from the Robert Wood Johnson Foundation (RWJF) and A.M. Best that essentially said the same thing. Some seem destined for that cart, while others appear ready to dance with the Knights of the Round Table.
CO-OPs, much like the anarcho-syndicate commune espoused by Dennis (a.k.a. the old woman), stand on the principle that supreme executive power derives from a mandate from the masses.
The mandate in this case, the ACA, intended to inject some competition into state insurance markets through the formation of consumer-driven alternatives to traditional insurance companies. But the CO-OPs, like small villages of filth-gatherers and shrubbers, found it hard to coexist with payers firmly entrenched in their markets like kings anointed either by divine right or through some farcical aquatic ceremony.
According to all three reports, numerous factors leave CO-OPs hamstrung. These include regulatory limits on marketing spend, requirements to garner enrollment from individuals and small businesses, technical difficulties on state exchanges, cuts to federal start-up loans and more volatile risk pools. Trying to sell insurance under such circumstances sounds harder than cutting down the mightiest tree in the forest with a herring.
Three--particular cases highlight the uncertainty that CO-OPs face: Iowa CoOportunity Health has been liquidated, Tennessee's Community Health Alliance had to freeze enrollment and Minuteman Health finds itself battling Blue Cross of Blue Shield of Massachusetts over risk adjustment payments.
That said, another three--situations show promise. The Maine Community Health Option is turning a profit, while New York's Health Republic and Colorado HealthOP dominated their state exchanges.
How are these CO-OPs finding their Grail in these dark times? Colorado HealthOP, which topped Kaiser Permamente in exchange enrollment, puts quality over price--broad networks, plans that focus on wellness and so on. Health Republic outsources operations, which makes for a lean business model. Maine's CO-OP keeps expenses low while enjoying significant market share, the RWJF report said.
The expert reports all came to a similar conclusion: Given the tremendous uncertainty in the health insurance market, and the tremendous differences between states, some CO-OPs are bound to face eternal peril alongside the knight unable to name the capital of Assyria. Growing too fast, charging too little and relying too much on outside funding sources (in this case, federal loans) will unfortunately doom any type of business.
That said, success in Colorado, Maine and New York suggests that troubles in Iowa, Tennessee and elsewhere can be corrected. The concept of the consumer operated and oriented plan deserves a chance, provided that CO-OPs can craft a sustainable business model, pay back their loans and, above all, provide insurance to those who otherwise may not have coverage.
CO-OPs face uncertain financial future
Report questions financial viability of CO-OPs
CO-OP beats Kaiser Permanente in exchange enrollment, says consumers want new type of insurer
Colorado, Iowa illustrate rapid rise and fall of CO-OPs