Nonprofit health insurance COOP open for business

    The new health insurance COOP that was announced in the February issue of the Illinois Business Journal, is now up and running and accepting customers.
    “It’s going excellently,” said Daniel Yunker, CEO of Land of Lincoln Health. “We’ve successfully built 35 health plans available for consumer access. The plans are on the exchange and we’ve designed those health plans to hopefully fit all budgets.”
    While some insurance companies have been creating policies for the exchanges that limit in-network providers, Land of Lincoln has focused on building a network of health care providers that its policy holders want to utilize.
    “We have a broad panel of quality hospitals and doctors throughout the State of Illinois, in all 13 rating areas, and they’re available across all 35 of our plans,” said Yunker.
    But Land of Lincoln’s network is not limited to Illinois. It extends throughout the nation, Yunker said. A full list of providers can be found on the Land of Lincoln Health website.
    Land of Lincoln Health is a COOP (Consumer Oriented and Operated Plan) that was created pursuant to the Patient Protection and Affordable Care Act. COOPs are private, member-run, nonprofit organizations that will sell health insurance coverage and will be subject to the same rules as other health insurers. COOPS differ from health insurance companies because they are member-run and required to use their revenues in excess of expenses to lower premiums, improve health benefits, improve the quality of health care, expand enrollment or otherwise contribute to the stability of coverage for members.
    The ACA not only authorized the creation of COOPs but established a forgivable loan fund to help them get started. Land of Lincoln was the 24th and last COOP approved under the act and it received a $160 million forgivable loan from the federal government. Some $15 million of that amount was used for startup expenses, including hiring staff, securing office space and buying computer equipment. The remaining $145 million will be used to fund reserves. A total $1.8 billion has been distributed by the federal government to the 24 COOPs.
    Prior to passage of the ACA, applications for health insurance policies covered a rather extensive examination of existing conditions and prior illnesses and injuries. That’s no longer the case, Yunker said. Now there are only three criteria used in pricing a policy: age, geographic area and smoking behavior.
     “Health insurance can be complicated,” said Yunker, “but we’ve done a lot here at Land of Lincoln Health to try to make it simpler for consumers. We want our plans to be easy to choose and easy to use.”
    With winning approval and receiving the loan award late last year, Land of Lincoln had a lot to do to start up the company and get it operational in time for the debut of the health insurance marketplaces on Oct. 1. Yunker said organizers had to secure space, buy equipment and hire staff, but they were able to streamline the process by developing partnerships with existing companies.
    Land of Lincoln Health currently has 34 employees, but Yunker estimates that, when including the partners, there are more than 250 people working to provide Land of Lincoln services.
     “Our team is comprised of group health insurance company experience at the leadership level as well as the operational level,” Yunker said, calling it “deep experience in the benefits area and deep experience in health care in general. We think that it’s because of this great foundation and collaboration of some strong talent that we’ve been able to successfully build Land of Lincoln Health thus far.”
    Yunker said that there are an estimated 1.8 million uninsured people in Illinois with more continually entering the pool plus individuals and employers who may consider switching insurance companies. Land of Lincoln’s target is to enroll 40,000 customers by the end of 2014.
    Illinois’ health insurance marketplace called “Get Covered Illinois” includes 165 plans offered by eight different insurance companies. With all of the options confronting consumers, Yunker recommends that shoppers don’t just look at price but also product.
     “When pricing health insurance, it is really important to look at it from a perspective of total cost, not just the monthly premium,” he said. “You need to also consider the deductible levels and copays as well as various benefits that are included, like pharmacy benefits and so forth. We focused a lot on total cost and our 35 plans are competitive across all rating areas.”
    He added: “But, we’ve taken the strategic approach that we wanted to design our 35 insurance plans to have lower deductibles, which means they will have slightly higher monthly premiums. But, what’s important is we want folks to be able to use their health plan. We don’t want them to think they have insurance and then not be able to use it.”