How one doctor tried to take the profit motive out of health insurance

Critics of the U.S. healthcare system, attempting to capitalize on the fury Americans have expressed toward insurance companies since the targeted killing this month of UnitedHealthcare CEO Brian Thompson, have renewed calls to rethink how the United States pays for care. Some, for example, have returned to the idea of single-payer health care, which would eliminate the need for private insurance.

Such a complete overhaul is not realistic for the foreseeable future. But one idea is worth revisiting: creating models that offer alternatives to for-profit insurers.

This is not a new idea. The original version of the 2010 Affordable Care Act contained a public option - a health plan run by the government- to compete with private insurers. Lobbyists succeeded in getting the provision nixed, though Democrats managed to secure a last-minute compromise: a new nonprofit health insurance entity, called a Consumer Operated and Oriented Plan, or co-op.

Instead of reaping profits for shareholders, co-ops reinvest profits to offer more services and lower premiums. This can make them more attractive to consumers and put pressure on traditional insurers to improve their practices. Accountability is built in, as members elect their own board of directors.

Evergreen Health was one such co-op. The brainchild of Peter Beilenson, a physician and one of my predecessors as Baltimore's health commissioner, Evergreen was intended to be a national model of patient-centered care. Beilenson hired clinicians, paid them a fixed salary regardless of how many patients they saw and opened four health centers where patients could have all their needs tended to in one visit. When they arrived, a health coach would counsel them on nutrition and mental health before a primary-care physician or nurse practitioner would treat them. If they needed further care, a specialist would come to the clinic to see them.

The idea was that such a "onestop shop" prioritizing prevention would help patients stay healthier and avoid costly services down the line. Those cost savings would translate to revenue to enable more Evergreen clinics to open across Maryland.

Unfortunately, Beilenson's grand vision never became reality. In 2017, five years after Evergreen started enrolling patients, it was forced to cease operations. And it's not alone: Of the 23 co-ops that came out of the ACA, only three remain in operation. Combined, they serve just 140,000 patients.

Why did co-ops struggle so much? Start with money. The ACA was supposed to provide $10 billion in grants to help co-ops get off the ground in every state, but that was changed to $2.4 billion in loans with a tight repayment schedule.

Onerous rules were also a major hurdle. The co-ops were prohibited from using government funding for marketing, a challenge for start-ups with no name recognition. They also couldn't enlist large businesses as customers, meaning they had to limit outreach to individual buyers and small-business owners.

"Since no one knew who we were, they didn't sign up with us," Beilenson said. He told me that in their first year, only 44 people enrolled.

Evergreen gained more members as he and his team pivoted to focus on small businesses. Word of mouth helped, too. "A lot of people signed up with us because they believed in the co-op model," he said. He began to see positive results; for example, he told me, their diabetic patients were 21 percent less likely to be hospitalized than patients on traditional insurance.

But Evergreen couldn't generate enough revenue to pay back the $65 million it owed in government loans. Plus, ACA regulations intended to stabilize the insurance market worked against the co-op. The law requires insurers with lower- risk enrollees to pay money to competitors with higher-risk ones, to ensure that they are competing with their plans, not their patients. Because Evergreen's enrollees were deemed healthier than those of its main competitor, it was on the hook to pay CareFirst Blue Cross Blue Shield, a massive, well-established company, nearly 30 percent of its revenue.

"We were basically running around with one hand tied behind our back and another leg tied to the other leg," Beilenson said. "There was just no chance of succeeding."

So what now? Beilenson, though he has long supported a single-payer system, doesn't believe abolishing insurance companies is realistic. But he is optimistic that there could be renewed energy to reengage around the public option - or to make another attempt at co-ops, though without all the obstacles that made them near-impossible to operate the first time around.

I, too, hope the groundswell of consumer fury will prompt lawmakers to reform the insurance industry. They should heed the lessons from the ACA co-ops and give innovators the tools to succeed rather than doom them to fail from the outset, leaving Americans with the same frustrating, unjust and unhealthy system.

Leana S. Wen is a Washington Post contributing columnist who writes a twice-weekly column on a broad range of topics with an emphasis on public health and health policy. She is an emergency physician, clinical associate professor at George Washington University and author of "Lifelines: A Doctor's Journey in the Fight for Public Health." Previously, she served as Baltimore's health commissioner. Opinions expressed by columnists do not necessarily reflect the views of Vermont News & Media.