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Articles - July/August 2014
Friday, July 11, 2014

ACA “Natives”

Dawn Bonder, CEO of Health Republic 

Health care reform is about more than collaboration and prevention. New organizational models are also part of the shifting landscape. For example, as a compromise alternative to the hotly debated “public option” — a proposed government-operated insurer that would have competed with private companies — the ACA created a new, nonprofit type of insurance carrier called a CO-OP, a Consumer-Oriented and Operated Plan. These new entities were intended to improve competition in the insurance market — especially in local markets where just a few carriers dominate. As nonprofits, CO-OPs’ surpluses must be used for purposes such as lowering premiums or improving benefits; as “consumer-operated” plans, at least half of their board members must be policyholders.

Oregon is the only state with two CO-OPs: Health Republic and Oregon’s Health CO-OP. That puts these organizations in the unique situation of competing directly with each other. “Head to head,” says Health Republic CEO Dawn Bonder, a straight-talking ex-attorney who served as senior advisor on health information technology to former Gov. Ted Kulongoski.

The reality, however, is that the CO-OPs’ greatest threat comes from entrenched market players. The new entrants were supposed to get a boost in visibility by being presented alongside established carriers on the insurance exchanges. But in Oregon and elsewhere, of course, those exchanges never functioned as intended. “It’s been very difficult,” Prows says. “Our intention was that most of our enrollment would come through the exchange, and it didn’t.”

As Cover Oregon’s failings became evident, the CO-OPs pivoted toward more outreach to insurance brokers. Many agents, though, were leery of the newcomers. “It took a while for brokers to feel comfortable with this out-of-nowhere health plan,” Bonder says.

Cover Oregon’s failure notwithstanding, Health Republic and Oregon’s Health CO-OP fared decently in the 2013-14 enrollment period: The former enrolled more than 5,000 members, while the latter expects to hit the 5,000 mark by year’s end. Of course, compared with Moda, the 800-pound gorilla of the Oregon insurance industry, both CO-OPs are small fry. The regional insurer, with revenues of more than $2 billion, boasts more than 414,000 medical-plan members in Oregon.

Still, Bonder and Prows contend their organizations have structural advantages over traditional carriers. CO-OPs are legally required to reinvest surpluses in their organizations; in addition to touting their member-driven governance structures, both chief executives take potshots at Moda for spending premiums on building up big reserves or buying the naming rights to the Moda Center. 

“We have a very consumer-focused mission,” Prows says. “It is not to build huge reserves. It is not to rebrand sports centers. It is only to build care the way people want it.” Moda spokesperson Jonathan Nicholas responds: “None of the money spent on partnership endeavors with the Portland Trail Blazers has any impact on Moda’s insurance rates in Oregon.”

Perhaps the biggest competitive advantage for CO-OPs is the fact that the insurers are indigenous to health care reform; they have, as it were, no preexisting conditions. “Trying to move a brand-new startup organization isn’t easy,” Bonder observes, “but it’s a lot more feasible than trying to move a behemoth.”


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