Consumers’ Choice success and the back story

When the Affordable Care Act was signed into law in 2010, one of the important provisions aimed at controlling healthcare premiums was the establishment of Health Care Cooperatives in every state.  These nonprofit co-ops were to provide competition to the traditional health insurance companies and were the alternative to the “public option” proposal in which a government backed insurance plan would be available on the Health Insurance Marketplaces.

The State newspaper reports today that South Carolina’s co-op, Consumers’ Choice Health Plan, has been well received by those signing up for health insurance through the Marketplace.  According to the co-op, over 50% of enrollees have selected Consumers’ Choice.  There is no question that the co-op has achieved the intent of making the cost of all plans in the Marketplace more affordable.

I want to personally thank Jerry Burgess, President and CEO of HelathCare 21 Business Coalition, for making Consumers’ Choice a reality by picking up where my earlier efforts to start a co-op stopped.  Here’s the back story.

Not too long after the Affordable Care Act became law, I contacted Terry Gardiner, who was with the Small Business Majority, to discuss the South Carolina Small Business Chamber of Commerce helping to set up a co-op or small businesses.  I had become friends with Terry during the push for the health care reform and his organization had close ties to the Obama Administration.  Terry put me in touch with the Center for American Progress that was about to convene a national meeting on moving the concept of state co-ops forward.

On November 17th, 2010, I attended the first meeting of this national effort in D.C. along with many other interested parties from around the country.  With the input from some of the contacts I made at this event, I started down the never-before traveled road and received a proposal from a Virginia-based healthcare consulting firm for a co-op pilot study.

The following month I convened a meeting with the Small Business Chamber’s trade association members to discuss the interest in pursuing a co-op.  The response was overwhelmingly positive.

Then in January of 2011 the newly formed national Consumer Operated and Oriented Plan Advisory Board held its first meeting in D.C. to take testimony from interested parties.  I was allowed to make a presentation via the phone.  Part of my testimony addressed funding.

While the Affordable Care Act had set up a $6 billion loan fund to get state co-ops off the ground, applicants would need to do a feasibility study to determine if and how a co-op could be successful.  I told the Advisory Board that without planning grants, not loans, it would be difficult for an organization such as our to conduct the needed feasibility study.

As a result of my testimony, I was contacted by the U.S. Department of Health and Human Services (HHS) co-op team to give me guidance in pursuing the development of a co-op for small businesses.  Their advice was to secure seed money to hire a consultant who could devote the effort needed for a preliminary exploration phase and to develop a grant proposal to do a feasibility study.  I began this task and solicited the input of Mr. Rob Tester, the former director of the South Carolina State Employee Health Plan.

A funding proposal was created and I began making contacts with the few South Carolina foundations likely to be interested in such an effort.  At the same time, the HHS co-op team had secured the interest of a major national foundation to possibly provide the resources for a comprehensive feasibility study of the potential small business co-op in our state.

Unfortunately the pitches to in-state foundations failed to gain traction.  Worse, in April of 2011 a deal to avert a federal government shutdown resulted in $38 billion in cuts to the budget with $2.2 billion coming out of the $6 billion co-op loan program.  Funding for state co-ops now looked in jeopardy and the national foundation HHS has found to provide seed capital for a feasibility study backed away.

With the funding to do the necessary study not on the horizon, the Small Business Chamber’s efforts went into hibernation….but not for long.

The following month I was contacted by the South Carolina Business Coalition on Health (SCBCH), an organization and its President, Jerry Burgess, I was familiar with.  Jerry had created the organization in our state to mirror his successful Tennessee operation, HealthCare 21, which was dedicated to helping larger businesses control their health insurance costs.

Jerry told me that the SCBCH was interested in putting up the needed resources to submit a proposal to HHS for funding to establish a co-op in South Carolina under the Affordable Care Act.  SCBCH believed that their larger business would benefit from stabilizing the costs of health insurance and opening up the possibility of the co-op providing services to them outside the marketplace.

On June 29, 2011, Jerry and I had dinner at 32 Queen Street in Charleston to further discuss the issue and we agreed that SCBCH would take the lead in pursuing a co-op and that the Small Business Chamber would assist in the effort.

Jerry immediately set out to build a team of experts, including Mr. Tester, and by September was asking for letters of support from the small business community.  A funding application was subsequently submitted to HHS for creating a co-op for South Carolina and the money was received.

I’m sure that Jerry will agree that getting the federal money was probably a lot easier than building a non-profit insurance company from scratch.  But his organization was successful and Consumers’ Choice Health Plan was born.  Today it is one of only 22 nonprofit co-ops under the Affordable Care Act.  It is also one of only four insurance companies offering plans on the South Carolina Marketplace and two of those plans are Blue Cross Blue Shield companies.

And with all the delays in the Marketplace for small business participation (online shopping for small business group plans has been pushed back to next year), Consumers’ Choice is the only company offering group plans on the Marketplace via the mail.

So congratulations to Jerry and all who made Consumers’ Choice not only a reality but also successful.

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