December 26, 2013

Will Mainers fly to co-op for health insurance?

That’s the question, as a fledgling nonprofit takes on a mountain of debt to be only the second provider in our marketplace.

By Joe Lawlor
Staff Writer

LEWISTON — Maine’s new health insurance marketplace, where people sign up for 2014 health benefits under the Affordable Care Act, almost formed as a monopoly, entirely controlled by Anthem Blue Cross Blue Shield.

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Robert Hillman, left, chief operating officer, and Kevin Lewis, chief executive officer, were quick to apply for the government loan that enable them to establish Maine Community Health Options.

Customers purchasing subsidized plans on the marketplace would have been limited to choosing between Anthem offerings if not for a series of unlikely events. Maine’s sparse and largely rural population would have made it a prime candidate for a monopolistic market, experts say.

Instead, Maine is one of 10 states with two insurers, thanks to a $64.6 million federal loan to form a co-op under an often-overlooked program created by the Affordable Care Act. In most of the states, three or more insurers offer plans that customers can choose from. So far, 73 percent of Maine consumers are choosing MCHO over Anthem, according to co-op officials.

“Without the existence of this co-op, there would be no competition on the marketplace. There would be no choice,” said Kevin Lewis, CEO of the new Lewiston-based co-op, Maine Community Health Options.

If Anthem had been the sole insurer, Maine would have joined New Hampshire and West Virginia as the only states with one insurance provider in the marketplace. Those shopping for insurance on are often self-employed or part-time workers who earn too much to qualify for MaineCare but were previously priced out of the individual insurance market and often were uninsured.

While nationally the co-op program has been slashed from $10 billion to $3.8 billion since its formation in 2010, Maine applied for funding early on and is one of 23 states to launch a cooperative, a little-understood program whose name evokes images of agricultural organizations and farmers’ markets. Originally, the co-ops were slated to appear in most, if not all, states.

Under the ACA, the co-ops are designed to be newly created competitors in the marketplace, a counterpoint to traditional for-profit insurance companies. Some predict the co-ops will flop and default on their loans, while others herald the co-ops as a potential transformative force in the individual and small group insurance market.

Maine ended up with a co-op only because Lewis and another health care industry executive shifted gears in 2011 and applied for the federal loan, winning funding in 2012 in an intensely competitive bidding environment.

“We had a eureka moment,” said Robert Hillman, chief operating officer for Maine Community Health Options, located downtown in the historic Bates Mill complex. Hillman and Lewis had been working on a managed care program to potentially compete for a state Medicaid contract. When the LePage administration in 2011 seemed less interested in that program, the pair noticed that it shared similarities with the co-ops that were to emerge under the ACA.


They jumped in, and in two months completed a 300-page federal application while persuading hospitals and doctors to back their efforts.

“We had an immediate transfer of energy to this co-op idea,” said Hillman, a former executive with Medical Network Inc., which forms provider networks for insurance companies.

“It was a perfect solution,” said Lewis, who previously headed up the Maine Primary Care Association. They survived a four-hour grilling in Washington, D.C., by consultants for the U.S. Department of Health and Human Services in November, 2011, and many follow-up requests for information before being granted the $64 million loan in March, 2012.

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