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Economy & Business
Tue October 1, 2013
New Healthcare Coop Targets Individuals and Small Biz
People across the country in need of health insurance have new options starting Tuesday. In Milwaukee, there is a new health insurance player.
The Common Ground Healthcare Cooperative is a nonprofit organization hoping to compete with the largest insurers in Wisconsin. The coop is a spinoff of the group Common Ground. It tackles social issues in the Greater Milwaukee Area.
Common Ground Health Care Cooperative is renting space in an office park just west of Milwaukee. The space is pretty sterile --white walls and blue doors. Donated artwork sits on the floor, while folders and boxes have overtaken a few of the cubicles. Bob DeVita says this is where it will all happen.
“We’re not sending them to corporate somewhere else. We’re corporate right here. This is it,” DeVita says.
DeVita is CEO of the new nonprofit health care cooperative. It has no shareholders; it’s owned and governed by members, of which there are none right now. DeVita says he doesn’t expect Common Ground to be the cheapest option in Wisconsin, but…
“We’re going to be competitive. Maybe not everywhere on every product, but competitive enough,” DeVita says.
Common Ground is one of 24 new health insurance coops nationwide, hoping to make their mark in an industry that large for-profit companies dominate--think Blue Cross, Blue Shield and Humana.
“The conventional wisdom is you gotta be big and you gotta bring market to the providers or they won’t make a deal with you. So we’re not big and we don’t have the market. We’re new and we have no enrollees yet,” DeVita says.
Still, DeVita says Common Ground has succeeded at inking deals with two health care networks-- Aurora and Trilogy.
“We said essentially, a very simple message. If you want us around you’ve got to give us a deal. If you don’t want us around, don’t give us a deal. And people said yeah, we’re going to give you a deal,” DeVita says.
The federal government has handed out more than $2 billion in low interest loans to help new insurers to get off the ground and be competitive in the new marketplace.
Common Ground Healthcare Coop has an operating budget of $2 million and employs 18 people. While in theory it will compete with major players in the insurance field, Bob Connolly says nonprofits target different customers. Connolly is chairman of the coop’s board.
“We were working on this long before the Affordable Care Act came along because the essential problem we address is the inability of individuals and small businesses and nonprofits to buy affordable health care,” Connolly says.
Connolly says he knows firsthand how challenging it is for small players to negotiate decent insurance plans.
“I own a small business. I’ve got two employees. I’m paying $4,600 a month. That’s $55,000 a year. I just got my rate increase for November 1st—12.8 percent increase they just gave me today,” Connolly says.
Connolly says the goal of the coop is to focus on those who need the most help.
Bill Oemichen is president of Cooperative Network. It’s an association of more than 600 member-owned businesses in Wisconsin and Minnesota. Oemichen served on the board that developed the criteria for new healthcare coops. He says where they exist; health care costs are typically cheaper than elsewhere.
“Typically Madison is viewed as being one of the low cost or lowest cost markets in the state of Wisconsin for health insurance. In fact, Group Health Cooperative, which is based in Madison, has been rated over the past several years as one of the highest, in fact last year the sixth highest rated health care plan in the nation out of over 380 that were measured,” Oemichen says.
Oemichen says it all doesn’t mean the success or failure of these new health insurers is a given. He says like most new things, it will take a couple of years for the new marketplace to play out.