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The Rocky Mountain Farmers Union has submitted an application to the government to form a health insurance co-op for its members. The co-op model is permitted under the national Affordable Care Act.
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The union’s membership includes 22,000 families across Colorado, many of whom cannot afford health insurance or pay for policies that would only cover them in emergency situations.
To establish the co-op, the union is seeking $70 million in low-interest loans, $14 million of which will be used for start-up money and must be repaid within five years, according to Lindy Wallace, president of the board overseeing the Colorado Health Insurance Cooperative Inc.
The remaining $56 million will be used to maintain solvency, Wallace said, and must be repaid after 15 years.
Rather than have profits from the co-op go to pay the salaries of executives, the money could be used to reduce premiums or expand coverage to include things like vision and dental plans, Wallace said.
Enrollees would be in majority control of the co-op’s board of directors and patients who use the plan would have more say in which benefits are offered. There are no specifics yet about what the co-op’s plans might offer or who the insurance carrier might be because the union’s application is still pending.
Wallace expects that the Farmers Union will find out sometime in July if its application has been approved by health care regulators.
States are allowed to have only one co-op under the legislation, and other groups are believed to have also filed for approval.
If the Farmers Union’s application is the one selected, benefits would be unveiled in September 2013 and would be on the market in early 2014, Wallace said.
Because so many of its members are from lower-income families, the co-op would focus on keeping out-of-pocket costs for policyholders low. Monthly premiums could range between $300 and $500. But because the Affordable Care Act allows those with the lowest incomes to pay on a sliding scale, out-of-pocket costs for some policyholders could be as low as $50 per month with a subsidy from the federal government.
An estimated 5 million Coloradans are either uninsured or underinsured, and while the coverage would not amount to universal health care, Wallace emphasized that the plans envisioned by the union would allow policyholders to have a real say in their coverage and have access to high quality, affordable health care.
Wallace estimates that an additional 175,000 people could be covered under the plans offered by the co-op in the next 10 years.
The focus of the plans would be on rural Colorado residents, but the policies would be open to all Coloradans. Eighty-five percent of the union’s members live in rural areas, Wallace said.
If approved, the co-op could help keep costs down for more than just policyholders.
The increased competition generated by the plans offered by the co-op will help contain costs overall, according to Dede de Percin, executive director of the Colorado Consumer Health Initiative.