Three nonprofit health plans out of 24 initially seeded with $2.4 billion in federal loans are providing much-needed competition across five states.
Insurers sued to recoup the money they were owed — and ultimately prevailed at the, entitling them to roughly $12 billion in additional payments — but it was a Pyrrhic victory for most of the nonprofit startups since they had long since gone under.
In the case of the Maine co-op, its finances collapsed in the second half of 2015, and it finished the year roughly $70 million in the red. Working closely with the state regulator, Community Health Options crafted a plan to cut costs and stay afloat. It renegotiated contracts with two major health systems, switched pharmacy benefit managers and top staffers took a 10 percent salary cut.
For Mountain Health, a roughly $8 million “surplus note” in 2016-17 from St. Luke’s Health System in Boise was crucial in allowing it to remain in business. Mountain Health ran a profit of $7.3 million through the first six months of this year, while the Maine and Wisconsin co-ops were operating $3.8 million and $13.3 million in the black respectively.
The existing co-ops point to various ways that they’ve had a positive influence in their markets beyond simply bolstering competition.
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