Doug Dammrose is executive director of Mountain Health CO-OP, a nonprofit health insurance company in Eagle that is gearing up to start offering insurance on the Idaho health insurance exchange this fall.
Health CO-OPs were created by the Affordable Care Act to increase the number of players in the areas seen as lacking competition in the health insurance market, with CO-OP standing for “Consumer Operated and Oriented Plan.” The Montana CO-OP got $58 million from the federal government for “solvency,” to cover claims when it begins offering insurance, and about $7 million for startup costs. In December, the feds paid out another $25 million to help Montana expand its CO-OP to Idaho.
Dammrose was chief medical officer at the Blue Cross of Idaho for 14 years before moving to Mountain Health CO-OP in December. Before that, he practiced internal medicine in Idaho for about 16 years.
Those two professional paths have positioned Dammrose well to respond to the challenges of helping to start a nonprofit health insurance company in an era of enormous change for the industry.
Idaho Business Review spent some time with Dammrose May 29 to learn more about Mountain Health CO-OP’s place in the Idaho health insurance marketplace. Dammrose’s comments have been edited for space and clarity.
Mountain Health CO-OP started in Montana and is based there. What led to the decision to expand to Idaho?
In order to understand whether or not there was any business or political support for more competition in the insurance market, I went out and talked to a number of groups and obtained 32 letters of support from various interest groups in the state. There were letters from hospital administrators and not-for-profits. I was seeking political support for a CO-OP; Health and Human Services wanted to know if there was actually interest at the grassroots level in more competition.
We know Idaho has a fairly low per capita income and a fairly high uninsured rate, approaching 18 to 20 percent. It seemed like a reasonable place to have some competition in the health insurance market.
Will every state eventually have one of these CO-OPs?
Originally there was an intent to, but funding has been cut back somewhat. I suspect there will be relatively little interest in expanding from where they are now.
For a business buying health insurance for employees, how is working with a health insurance CO-OP different from working with a for-profit health insurance company?
The way we’ve designed the products is to try to create a low-cost product that an employer could provide for his employees that would be affordable.
Rather than spending money to recreate infrastructure for claims processing, medical management, disease management, all the things we normally see in a commercial insurer, the business model is to buy that on the market.
The belief is that you can do that more cost-effectively without investing in more unneeded infrastructure, and therefore create a lower administrative cost burden. The mission statement for the CO-OP is such that you don’t have CEOs with million-dollar salaries. It’s a fairly tight budget for full-time employees, and so it tends to be more competitive in that perspective.
The CO-OP was designed primarily for individuals and small groups, which in Idaho probably make up the vast majority of businesses in the state. We’re willing to have lower profit margins and a lower-cost product.
We’re using the business structure of Mountain Health CO-OP in Montana. I think they’ve got 18 people in their office and we’ve got four. And then we buy the backroom claims processing and medical management and those kinds of things on the market; we use Altius in Utah.
Why did you make the move to Mountain Health CO-OP?
As I look at my career at Blue Cross, one of the first talks I gave was at a medical meeting where I was talking about the uninsured in Idaho. It was very close to 20 percent uninsured at that time, in 1996. There are still 18 to 20 percent uninsured, and during that time insurance costs have actually gone up three to four times the consumer price index in Idaho. So you ask yourself, what have we really done? What have we done during that time, if the insurer is really the advocate for the consumer? My goal was to create cost-effectiveness in health care. I looked back and said, ‘Gee, I haven’t done that very well.’
As a country we have spent two or three times what our competitors are spending on healthcare, yet we don’t have better outcomes. How do we change that?
What we’ve tried to do as we’ve put this CO-OP together is to engage the provider community who I think are starting to realize this can’t go on, we can’t continue to have health care inflation that exceeds the CPI to such a degree. It’s not so much quality of care, as it is the unaffordability of it.
What we’ve tried to do is engage the provider community to consider working around a fixed budget about what health care should be instead of having this open-ended budget. We’re being transparent with providers. There’s been a lot of distrust between providers and insurers, a belief that a lot of the premium dollar was being withheld from the provider community and was being retained for corporate purposes rather than for expanding health care benefits or for providing higher compensation to hospitals and doctors.
Will you offer a preferred provider type plan that steers members toward a particular health system in the Treasure Valley?
Whether it’s personal relationships or familiarity with both systems, the current business philosophy that’s being espoused by St. Luke’s Health System Select medical network and those associated physicians seems to most closely aligned with our mission.
We will have a statewide network. I am moving away from the role of medical director with this position. I’ve tried to align myself with systems of care in the state that I feel more confident about in their ability to recognize what is cost-effective and what is not.
When will the CO-OP be fully up and running?
We started our application process with the Department of Insurance for our Certificate of Authority very early this year. We’re still waiting to hear from them.
If we are going to be on the Idaho health exchange this fall, we will have to have our Certificate of Authority very soon. Open enrollment starts Nov. 15 and goes through Jan 15.
How much money are you required to have on hand to start providing insurance?
The statutory requirement is a million dollars. Because of the backing of the federal government, we have the $23 million allocated to Idaho, combined with the $58 million that Montana has. Montana was very successful in its first year of operation. They enrolled, predominantly through their exchange, about 12,000 lives.
How many people do you need to insure in order to be profitable?
We think we can be profitable with about 10,000 members in Idaho. We think the market is receptive and we think we could hit that during open enrollment.
You’ll only insure businesses with 100 employees and under?
Remember, we are individual and small group. I think you walk before you run. With other opportunities, if we get all of our other ducks in a row, that’s where we’d like to go.
Will you be providing wellness programs?
As far as wellness programs go, we probably won’t be necessarily doing anything other than maybe health fairs and stuff like that that promote peoples’ awareness of doing the right thing. We’ll probably have health newsletters and things like that.