The Affordable Care Act (Obamacare) and Health Care Cooperatives,

are they right for you?

Healthcare costs in the New York-Northern New Jersey area increased 5.2 percent in the past year, the most rapid rise in consumer goods behind the cost of fuel. The rising costs have made health insurance increasingly unaffordable for individuals who have to buy their own. This poses a threat to consumer spending, which is helping drive the nation’s economic recovery.

Since the introduction of the President’s health reform bill , there may be potential solution: health insurance cooperatives.  $3.4 billion dollars has been set aside  for co-ops in the new health care law. $174 million in loans was recently given to the Freelancers Health Service Corp., New York’s first health insurance co-op, now known as Health Republic.

As of September 2011, there were 2.9 million New Yorkers without health insurance, a number that has increased much faster in New York than in the U.S. as a whole, according to the Fiscal Policy Institute.

The purpose of health insurance co-ops is to introduce more competition to the market and help drive down premiums.They differ from larger, corporate insurance companies because cooperatives are  nonprofits, which mean any revenue earned will be put back into the co-op. Also, they are owned and run by an elected board of co-op members, rather than investors.

Consumers are more likely to trust the co-op model versus corporate insurance companies.   As a result of inflation, employers and some consumers are having a revived interest in narrow networks. In a narrow network, the co-op promises specific doctors and hospitals a steady flow of business from its members. This enables the co-ops to negotiate for medical services. It’s hard for existing insurance companies to turn establish a new policy, but co-ops can start with a blank sheet of paper and aren’t burdened by longstanding contracts with hospitals and doctors. Co-ops can pay a doctor more money if he or she spends more time with patients. Or, co-ops can redirect reimbursements toward primary care instead of high level expensive testing.  Health Republic offers health insurance to individuals and families, as well as small businesses.  Health Republic is a tax-exempt corporation, licensed under Article 43 of the New York Insurance Law. 

The federal law defines a qualified nonprofit health insurance issuer as an organization meeting the following requirements:

Substantially all of its activities must consist of the issuance of quality health plans in the individual and small group markets in each state in which it is licensed to issue such plans.

It must not be sponsored by a state, county, or local government, or any government instrumentality. Its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference.

•              Governance of the organization must be subject to a majority vote of its members.

•              It must operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members in accordance with regulations to be promulgated by the Secretary of HHS.

•              Any profits made would be required to be used to lower premiums, improve benefits, or other programs intended to improve the quality of health care delivered to members.

•              In New York, those with Health Republic Insurance do not have to pay co-payments when seeing their primary care doctor and the deductible doesn't apply to ambulatory care services.

•              Health Republic also does not require referrals, this will enable you to see any provider in their network