Co-op Insurer Tops NY Health Exchange

About 370,000 New Yorkers have enrolled in private health insurance plans through the state marketplace, and nearly one in five of them signed up with a new kind of company. Health Republic, a start-up formed two years ago with federal funding, has the largest market share of any insurance carrier whose plans are offered on the New York State of Health, including longstanding industry leaders such as Empire Blue Cross and Emblem Health.

With 19 percent of enrollees, Health Republic has the largest market share in the state health exchange. It also uses an existing provider network that allows members access to hospitals that are not included in many exchange plans, including Memorial Sloan Kettering Cancer Center and NYU-Langone Medical Center.

Health Republic, which refused to speak with WNYC for this story, is one of three spinoffs around the country from the Freelancers Union and one of 23 “Consumer Operated and Oriented Plans” nation-wide. All are non-profits, set up with federal subsidies that have drawn fire from Republican opponents of the Affordable Care Act. Rep. Darrel Issa (R-Ca.), Chairman of the House Government Oversight Committee, has argued that because the Freelancers Union is a for-profit company — unlike Health Republic itself — it should have been ineligible to receive federal funding through the CO-OP program.

CO-OPs were created after the GOP defeated efforts to establish a government-backed “public option” on the exchanges.

“The idea is that you will have very different health plans than the ones to which we are accustomed,” said Bradford Gray, from the Urban Institute. “The organizations are really set up to be consumer controlled.”

Consumer control is a work in progress because the co-ops have only just begun to get consumers. Right now, Health Republic is being run like any other non-profit, but eventually, its board of directors will be controlled by members — a bit like a credit union. How these coops will all be “very different health plans” also is not yet clear, but one way they have distinguished themselves early on is by being relatively cheap. Elizabeth Carpenter, from Avalere Health, says with premiums so low, it is not surprising Health Republic is so popular.

“The question is, long-term, whether or not the co-op premiums really do cover the administrative and medical costs associated with the enrollees who enrolled in the plans,” she said.

Carpenter does not have any data to project about whether Health Republic can cover the cost of treating all its new customers. But she said that when she looks at charges from other insurance carriers in the region — including non-profits — she would not be surprised to find the company’s relatively inexpensive 2014 rates creeping up next year.

“You do have to question whether or not that price is sustainable,” she said.

A price hike could be the tipping point for Health Republic enrollee Drew DeMaio, who initially enrolled with Empire Blue Cross but switched for the lower prices and broader physician network.

DeMaio likes the company’s philosophy. He likes the doctors he can use in-network. And he likes the low monthly premiums — but even so, he’s pretty bitter about the high out-of-pocket expenses for all his doctors visits and MRI’s.

“Paying $300 a month — and then you’ve got to pay a deductible for all the serious stuff, anyway — that’s another $6,000,” he said. “I don’t make a lot of money.”

DMaio said he is spending so much money right now, that after he uses his Health Republic coverage to figure out what is causing his neck pain, he might just go back to being uninsured, paying out of pocket and gambling on the federal tax penalty.

That would be a problem for Health Republic. Covering people who are sick and losing them when they’re healthy is the exact opposite of what all insurers need to do to stay afloat.

Update, June 25, 2014: Health Republic has applied to state insurance regulators to increase customer premiums up to 19 percent, depending on the metal tier and the area of New York. In a statement online, the company says the price hike is “due to increasing medical costs, declining federal support, and to ensure our organization achieves long-term sustainability.” There is a 30-day public comment period, and final rates will be released later this year. Other carriers have also proposed rate changes, including both increases and decreases, and are in the process of notifying consumers.