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Kevin Lewis and Robert Hillman took a huge leap of faith when they created their nonprofit health insurance cooperative Maine Community Health Options in 2011.
As a startup whose business plan was based on an emerging health insurance model known as “Value-based Insurance Design,” they were betting the company's future on the principle that creating incentives for early and proper management of chronic illnesses such as asthma, diabetes, hypertension and chronic obstructive pulmonary disease was the right way to go, even if it meant significantly reducing or even eliminating co-pay charges for preventive care visits and prescriptions proven to be effective in keeping people who have those illnesses healthy. In addition to competing against well-established health insurers in Maine such as Anthem Blue Cross and Blue Shield, Aetna and Harvard Pilgrim Health Care, they also faced the big unknown of whether President Obama's landmark 2010 Affordable Care Act would even survive unrelenting political and legal challenges.
Four years later, their consumer-operated and oriented health insurance company, or CO-OP, has far surpassed even their own expectations. After blowing past its 15,500 first-year enrollment goal in 2014 by signing up more than 40,000 members in Maine— including 83% of those signing up for insurance using the federal health insurance exchange — the company expanded this year into New Hampshire (dropping “Maine” from its corporate name for obvious reasons). It now covers more than 70,000 members in the two states.
Of the 23 Co-Ops created by the ACA, it's the only one that was profitable in 2014, posting a net income of $5.9 million, according to a July report by the federal Department of Health and Human Services.
For Lewis, the CEO of Community Health Options, and Hillman, its chief operating officer, these early successes affirm the shared vision that a nonprofit health insurance company — run by its customers and which uses its profits to lower future premium prices, enrich benefits and improve the health of its members by removing the financial barriers — could offer more choice for consumers and greater competition in the marketplace.
“Apart from achieving some of our goals on the macro-level, what continues to drive us are the powerful anecdotes we hear each and every day of the many ways we're improving the lives of our members,” says Lewis, who previously served as CEO of the nonprofit Maine Primary Care Association.
A graduate of the master of public policy program at the University of Michigan and the Johnson & Johnson Health Care Executive Program at UCLA, Lewis embraces the value-based insurance design approach to health care. Instead of a “one size fits all” approach to health insurance copayments, which makes no distinction between high-value and low-value prescriptions or health care procedures, VBID uses no, or low, copayments to encourage the use of medicines or procedures with proven health benefits. In effect, a health insurer following the VBID approach creates incentives that encourage people to become more savvy and engaged in their own health care.
Lewis found a ready ally in Hillman, who brings 23 years of health care experience to his position as Community Health Options' COO. As the former CEO of Medical Network Inc. (MedNet), Maine's largest independent, physician-owned-and-directed preferred provider organization, Hillman had directed and supported “third-party administrator” services to self-funded employers. Like Lewis, he had become frustrated by what he saw as a “lack of trust between payers and providers” that was coupled with rising costs and less-than-optimum health for the insured customers.
Hillman says the opportunity provided by the ACA to create a consumer-operated and -oriented health insurance company was serendipitous for him. “Everything aligned at the right time,” he says. “It gave us the opportunity to create what already was the answer in both of our minds to the question, 'How can we do [health care] differently?'”
They have complementary skills. Lewis describes himself as a “pretty decent writer and conveyor of ideas” whose instinctive response to barriers is to ask himself, “What can I do to overcome the barrier?” Hillman sees himself as being “very good at operations” and having “the ability to see the solution while we're talking about the problem.”
Their combined skills, knowledge of Maine's health care challenges and established relationships with key stakeholders were key to Community Health Options' quick start out of the gate after being named in March 2012 as one of the ACA's first CO-OP recipients, receiving a $62.1 million loan from the federal Centers for Medicare & Medicaid Services to start the company.
When approval came through, they'd already received commitments from physicians and hospitals giving them a statewide network of providers — an essential element of their early success in the first year of the ACA's marketplace in Maine. “When you put together the wealth of relationships both of us already had in Maine, it allowed us to engage the people at the highest levels that we needed to speak with in order to build our network,” Hillman says. “The quality of your network is a huge part of any insurance company's success.”
Located on the third floor of Storehouse No. 2 within Lewiston's historic Bates Mill complex, Community Health Options has become a $168 million company with 182 employees in less than five years. It's adding choice, competition and price stability in a variety of health insurance plans to individuals and groups, both on and off the ACA marketplace. In the current year, its premium prices for individuals dropped 0.8% and by 10% for small groups. Going into the 2016 open enrollment period, Lewis says its individual rates will increase by 0.5% and for small groups by just under 4%.
“We're smack dab in the middle of insurance reform,” says Hillman. “That's what keeps me going: It's really exciting stuff.”