“As a matter of fact, what’s often not really known out there is that members of Congress have to find an exchange as well, so I’ll be looking at the products you have here to offer.” — Second District Congressman Mike Michaud, speaking last Thursday in Lewiston at the official launch of Maine Community Health Options. - Photo by Andy O’Brien
“As a matter of fact, what’s often not really known out there is that members of Congress have to find an exchange as well, so I’ll be looking at the products you have here to offer.” — Second District Congressman Mike Michaud, speaking last Thursday in Lewiston at the official launch of Maine Community Health Options. - Photo by Andy O’Brien
Fewer than six in 10 Americans know that the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, is still on the books, according to a Kaiser Family Foundation poll released in April. Seven percent think that the Supreme Court struck it down and 12 percent say Congress repealed it. Nevertheless, after surviving a Supreme Court challenge and 37 attempts by members of Congress to kill it, Obamacare is still very much the law of the land, and the date is nearing when the major provisions of the act are set to take effect, come January 2014. Most people know about the law's individual mandate, which requires everyone to purchase insurance or face a penalty, but many are unaware that small businesses and individuals without access to affordable health insurance coverage are supposed to be able to purchase plans through new Health Insurance Marketplaces (formerly known as exchanges), with that coverage to take effect in January.

New Marketplace Plans

Under the law, health insurance for individual and small group plans sold in the Marketplace must offer a minimum standard of service known as the Essential Health Benefits. The EHB includes 10 categories of services, including emergency care, prescription drugs, preventive services and chronic disease management. The law says that the scope of EHBs must be equal to the scope of benefits provided under a typical employer plan.

Depending on whether the governor and the Legislature decide to accept Medicaid expansion, those earning below 133 percent of the poverty level would qualify to have 100 percent of their coverage paid for. For individuals and households earning between 133 and 400 percent of poverty guidelines, subsidies in the form of tax credits will be available to purchase coverage through the Marketplace. In order to qualify for subsidies, an individual's annual income would need to fall between $15,282 and $45,960, and between $31,322 and $94,200 for a family of four. People would choose bronze, silver, gold or platinum coverage. Under the bronze plan, a person would be expected to pay 40 percent of the cost of health care through deductibles and co-pays. Under the silver plan, 30 percent, while gold would be 20 percent and platinum 10 percent. As the coverage increases, so, of course, do the premiums.

Federal subsidies will be connected to the silver plan. The Kaiser Family Foundation's website at KFF.org has a calculator where people can enter their income and number of household members to get an idea of how much they would pay for coverage. For instance, two 40-year-old non-smokers with two children earning the Maine median household income of about $46,033 (193 percent of poverty level) would pay an average of about 6 percent of their income, or $2,747, for insurance premiums under a subsidized silver plan. Out-of-pocket expenses for that family would be limited to $4,500. Under all plans, preventive services will be covered at no cost to the policy holder.

According to the US Department of Health and Human Services, individuals and families under 250 percent of poverty (about $27,000 for an individual and $55,000 for a family of four) are also eligible for sliding-scale cost-sharing credits to help lower the out-of-pocket expenses. Certain young adults under 30 and individuals exempted from the individual mandate because they cannot find affordable insurance are allowed to purchase catastrophic plans, which include the Essential Health Benefits but with high deductibles. Under Obamacare, insurance companies are prohibited from denying coverage or charging higher premiums based on a pre-existing condition.

While the KFF has provided some broad cost estimates, prices of the various plans will vary and won't be known until the Marketplace's enrollment opening date of October 1 gets closer.

According to the Bureau of Insurance, when Maine's new Marketplace for individual and small group plans comes online in October, there will likely be only two entities selling coverage: Anthem Blue Cross Blue Shield and Maine Community Health Options, a nonprofit, consumer-directed cooperative.

Maine Community Health Options - Maine's New Nonprofit Health Insurance Cooperative:

Last Thursday morning in a converted wing at the former Bates Mill in Lewiston, members of the health care and business community, as well as representatives from Maine's Congressional delegation, gathered for the launch of Maine Community Health Options.

One of 24 consumer-directed, not-for-profit health insurance cooperatives in the US, MCHO has secured $62.1 million in federal loans from the Centers for Medicare and Medicaid Services (CMS) available under Obamacare. During the debate over health care reform back in 2009, while many argued for the creation of a publicly funded insurance plan called the "public option" to compete with private insurers, conservative Democrats came up with the cooperative provision as a kind of compromise. Originally, the plan included $6 billion to finance the new Consumer Operated and Oriented Plans (CO-OP), but after continued fights over government spending, the funding has since been cut to $3.4 billion.

Unlike for-profit insurance companies with boards of shareholders, MCHO will be governed by a board elected by subscribers, and a majority of the board must be subscribers. Under the law, all surplus revenues of the co-op must be used to reduce premiums, as well as improve benefits and the quality of care for members.

"This ribbon-cutting is also a celebration of access to a new type of insurance coverage that's Maine-grown, Maine-directed, and Maine-specific," said Barbara Leonard of the Maine Health Access Foundation, a philanthropic organization dedicated to expanded coverage for the uninsured, which has been a major funder of MCHO. "In a state like Maine that still has local town meetings to make local decisions and a vital citizen legislature to make decisions at the state level, this is a model that rings true."
While MCHO may be a new player in the insurance market, cooperatives are no strangers to Maine. Many local fishermen and farmers have long supported producer co-ops as a way to market and sell their products. The pre-order food buy-clubs of the 1970s morphed into consumer-run co-ops like the Belfast Co-op and the Good Tern Co-op in Rockland. Out on some of the islands, residents run the electric utilities as cooperatives. There are even a handful of worker-owned, self-directed companies in the state. According to Cooperative Maine, an organization dedicated to promoting co-ops, 55 percent of financial institutions in Maine are cooperatives; they're known as credit unions.

Maine Consumers for Affordable Health Care's (MCAH) policy director, Mitchell Stein, who serves on the advisory board of MCHO, says the health insurance cooperative model is not a new idea, but it shows promise.

"There's nothing new under the sun," he said. "In the old days, just about all insurance companies were mutual companies, which are effectively co-ops. The profits went back to the policy holders. That changed over time to where there are very few of them, but the ACA made these loans available so that they could serve the marketplaces."

Back in the 1930s under President Franklin Roosevelt's New Deal, the Federal Farm Security Administration also made loans available to set up health insurance cooperatives for farmers. With a few notable exceptions, the New Deal-era cooperatives have mostly disbanded.

Questions & Criticism

Supporters of insurance co-ops argue that the new carriers will be much more customer-friendly than conventional insurance companies because they are directed by the people who are insured and will not be as concerned with making a profit. However, critics worry that the co-ops will not be big enough to compete and will lack the negotiating power of private insurers. A policy brief published by Health Affairs and the Robert Wood Johnson Foundation questioned whether the co-ops would be sustainable given the fact that they must enroll a certain number of people to generate sufficient revenues to maintain services.

"[Cooperatives] will also need to offer a range of services, including disease management, wellness and prevention, and utilization management to ensure the provision of appropriate care and quality of service. These services are costly, and even without having to earn enough in revenues to pay profits to investors or cover marketing expenses, CO-OPs may be financially squeezed," the RWJF brief stated.

"The financial viability of the exchange for the marketplace is a general concern," said MCHO CEO Kevin Lewis. "That's why the ACA put in the three Rs; the risk adjustment mechanism, risk corridor, and the reinsurance."

Those provisions aim to deal with uncertainties in the insurance market and equalize the distribution of risk.

Furthermore, Lewis says the federal law requires CO-OPs to have a solvency level of twice the state requirements. MCHO reportedly had $55 million in federal solvency reserve dollars, which must be paid back within 15 years. The organization's goal is to enroll at least 15,000 subscribers by the end of 2014.

"My feeling is that the law gives them several years before they need to start paying their loans, so I think there is time to get them up and running," said Stein of MCAH.

Although there are currently four insurance carriers selling in the individual and small group market, so far only Anthem and MCHO have filed applications to sell in the Marketplace, and with time getting short, it looks likely that they will be the only two options.

"Here in Maine, it's them and Anthem in the individual market, so I think there won't be some of the same 'getting lost in the crowd' issue that there might be in other larger states. I expect and hope for them to be a successful competitor because from our perspective, the more options out there for people, the better," Stein said.

The plans and coverage rates for carriers selling in the Maine Marketplace are currently under state and federal review, but are slated for release to the public sometime before October 1.