Briefing: Health Care Cooperatives
The state Division of Insurance recently filed new regulations intended to make health insurance less expensive for small businesses. The new rules allow small businesses to form purchasing cooperatives and require insurers to offer lower-cost plans.
Didn’t the state already do something like this?
The general idea for this type of insurance cost containment was part of a law passed in August 2010. The new regulations flesh out exactly how it will work.
How would the cooperatives work?
The regulations allow businesses to create six cooperatives to serve a maximum of 85,000 people. The cooperatives will work with insurance carriers to create new products.
How would cooperatives save money?
Rather than having to deal with insurers individually as they do now, small businesses would be able to band together and gain more buying clout. That could bring their premium hikes more in line with what larger businesses face.
How would the lower-cost plans work?
Insurance carriers will be required to offer “selective” or “tiered” network plans that cost 12 percent less than regular plans. Selective network plans limit the providers and hospitals the insurance will pay for, while tiered network plans make patients pay more out of their own pockets if they choose higher-cost providers.
Don’t plans like this already exist?
Yes. The governor’s office points out that Blue Cross Blue Shield of Massachusetts recently announced that its new tiered network plan has attracted hundreds of small businesses. Worcester-based Fallon Community Health Plan has offered these types of plans for years and says they’re very popular with small businesses. The regulations say all insurers must provide similar options.
What’s the timeline for all this?
The regulations will probably go into effect in April, which will allow organizations to apply to be certified as one of the six cooperatives. After the cooperatives are certified, insurance companies will have to work with them to design new products, which the governor’s office says could be available by late summer.
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