Health insurance co-ops are companies that were given federal incentives to compete for business under the Affordable Care Act. Roughly two dozen of them set up shop across the country. Now, only half are still in business, and one of them is in Connecticut.
Ken Lalime started an insurance company from scratch. It wasn’t exactly easy.
"Nobody’s built a new insurance company in the state of Connecticut in 30 years," Lalime said. "There’s no book that you pull off the shelf and say, let’s go do this."
Lalime runs Healthy CT, an insurance co-op started with doctors from the Connecticut State Medical Society. Unlike others across the country, Lalime and Healthy CT are still in business as the third round of open enrollment under Obamacare begins.
But when he started out, he didn’t know who his customers would be; he didn’t know whether they’d be sick or healthy; and he didn’t know how much to charge. His rates ended up being eight percent higher than the competition.
"In that first year, the reason we had such low market share was that consumers -- new to the industry, new to insurance -- most of those individuals bought on price," Lalime said. That wasn’t good for Healthy CT. It only got about three percent of all of the state’s business under the ACA.
But Lalime said that slow ramp up actually helped. He didn’t have a huge number of claims to pay right out of the gate. And the ones he did pay didn’t break the collective bank.
"Hindsight, yes, that didn’t hurt us, to be able to take it slowly," Lalime said.
By year two, Lalime said his company had more back-office experience, more time for consumer outreach and, it turns out, a more competitive price. As a result, his company went from three percent of the market share to 18 percent.
Now it’s year three, and Healthy CT is still in the game.
"There’s some more healthy competition here, that’s great," Lalime said. "We think that’s a fine thing that the ACA wanted to do this, and the benefit goes to who? The benefit goes to the consumer."
And it’s a benefit that consumers in states like Colorado, Iowa, and New York won’t have. Their co-ops have failed.
Healthy CT is a WNPR underwriter.