Rolling Out a Remedy
Co-ops Offer
Health Insurance Option
It’s said the more things change, the
more they stay the same. In the 1930s, rural Wisconsin residents
formed electric co-ops because city-based investor-owned utilities
weren’t interested in serving only a few customers per
mile of line. The distinctive challenges of meeting rural electric
power needs were largely resolved by the initiative and determination
of those who populate the American countryside.
Fast forward 70 years. Facing the need for
another product that’s comparatively more difficult for
country dwellers to obtain, that’s less attractive to
offer commercially in areas where people are less concentrated
by sheer numbers, and that shows every sign of growing both
increasingly expensive and increasingly necessary, rural Wisconsin
turns once again to its own initiative, this time to provide
health insurance on the farm.
Say hello to the Farmers Health Cooperative
of Wisconsin (FHCW), also known as “Co-op Care.”
Unquestioned Need
No one who attended the February rollout of
Co-op Care at news conferences in Madison and Green Bay could
doubt the importance of creating a new insurance option. Bill
Oemichen, CEO of the Wisconsin Federation of Cooperatives (WFC),
called “the absence of portable, quality health care coverage”
the top concern for Wisconsin agriculture.
“We know that from surveys we’ve
done over the past several years,” he said. “Even
in 2002 and 2003 when dairy prices were at almost record lows,
farmers in Wisconsin said by a factor of about four to one that
health care was a much bigger issue for them than low dairy
prices at that time.”
Oemichen said nearly one in five Wisconsin
farmers have no health care coverage at all, for themselves
or any family member. Slightly more than 40 percent buy coverage
for catastrophic health events, paying high premiums and high
deductibles for a short list of benefits. Eighty percent lack
coverage for preventive health care and more than 40 percent
can afford insurance for only some family members, so they have
to guess which ones to cover.
But the new FHCW represents an “innovative
health care plan that was written by farmers for farmers that
will be owned and managed by farmers,” Oemichen said,
thanks to a “unique coalition of federal and state officials,
private sector representatives, and cooperatives.” U.S.
Senator Herb Kohl (D–WI), another news conference participant,
said he was “really proud to be a part of it.”
Kohl and Wisconsin Congressman David Obey
shepherded through a federal appropriation of $4.5 million for
initial capitalization of health care cooperatives in Wisconsin
and Minnesota, something Kohl characterized as “beginning
to deliver on a promise” to make health insurance more
accessible.
Financial support came also from a state agriculture
department grant of $79,000, another $600,000 from the Wisconsin
Federation of Cooperatives (WFC), a $450,000 grant from the
University of Wisconsin medical school’s Partnership for
a Healthy Future, and a $10,000 grant from the AgStar Financial
Services Cooperative.
Before all that, though, state legislation
was needed to create a framework for farmers to bargain for
group coverage. Governor James Doyle signed the Co-op Care authorization
into law in 2003, with subsequent fine-tunings in 2005 and ’06.
He credited the Legislature for addressing the issue “in
a very bipartisan way,” and WFC for “taking on the
challenge” to “get through several levels of insurance
regulation and the economics of it” and make the program
a reality.
The Nuts and Bolts
What Co-op Care offers is pretty straightforward.
What’s new and different is it gives farmers, with the
greater purchasing power implicit in group status, access to
a highly experienced plan administrator and one of the nation’s
largest insurance companies.
“A lot of insurers weren’t very
interested in looking at farmers as a large group because they
perceive them as very risky,” Oemichen said at the Green
Bay news conference.
Those companies apparently hadn’t talked
with Max Gannon, CEO of Agri-Services Agency (ASA). A division
of Dairylea cooperative in Syracuse, New York, ASA has insured
farmers for the past 30 years and is now the plan administrator
for Co-op Care. As to the presumption that insuring farmers
is an unusually risky business, Gannon says that’s “absolutely
false.”
“They’re hardworking people; they’re
healthier than the average population,” he says. Gannon
has formed those views by running a company that provides health
and workers compensation coverage for 70,000 farmers and agribusinesses
nationwide.
Another high-profile participant is Aetna
Life and Casualty.
Aetna is one of the five largest insurance
companies in the United States. In an era of bigger not always
meaning better, it rated Number 2 in the health care category
of Fortune Magazine’s Most Admired Companies for 2006.
Its business ethics have consistently won high ratings.
Aetna Vice President Mike Sisk was on hand
for the February rollout and said Co-op Care presented an “interesting
opportunity” to pursue one of his company’s goals,
that of extending coverage to many people who are currently
uninsured.
“This isn’t seen in a lot of other
markets,” Sisk said, praising the elected officials, WFC,
and other participants for their “effort, commitment,
and courage” in creating the program.
Co-op Care’s six plans range from low-premium,
high-deductible coverage in conjunction with a Health Savings
Account (HSA) for young farmers who don’t expect to file
a lot of claims to a higher-premium, low-deductible for older
farmers who anticipate greater health-related expenses during
a given year.
A three-year contract between Aetna and the
FHCW aims at stabilizing rates, and under Wisconsin law, individual
participants must join for a three-year membership. These longer-than-usual
commitments enable the co-op to negotiate more favorable terms
with the insurer and to benefit from caps on premium increases.
In Oemichen’s words, someone who buys a membership during
the co-op’s inaugural year “will have a very good
idea what their premium will be in year two and year three.”
Taking It on the Road
The first health care co-op for farmers ever
created in the United States, the FHCW is a preferred provider
organization (PPO) tailored to needs identified by potential
members.
Early on, several thousand farmers were surveyed
by telephone to ascertain what health care coverage they had,
where the deficiencies were, and what they thought was needed
to improve their situation. Focus groups at two locations refined
the information gleaned from the surveys and the possible responses.
By last month, it was time to find out how
the broader public would react. Almost two-dozen town hall meetings
were scheduled in March, convening morning, afternoon, and evening
at each of seven locations across northeast and central Wisconsin.
Organizers anticipated about 50 people attending
each session, or about 150 per day. The first day brought more
than 250. As the marathon schedule rolled on, attendance continued
to exceed expectations and attendees weren’t indulging
idle curiosity; they were coming prepared.
WFC Co-op Care Project Coordinator Katie Mnuk
said she immediately heard stories of 20–30 percent annual
premium increases for coverage that fell short. Participants
were “pretty savvy” about the coverage available
to them, she said. “They’re looking for good coverage
and know they don’t always have it the way things have
been.”
One problem that’s not widely understood,
however, is the frequent denial of coverage for injuries suffered
working on the farm.
Many farm families obtain employer-sponsored
health benefits by having one spouse take a job off the farm,
Mnuk noted, “but they don’t realize until it’s
too late that when somebody’s hurt in the barn doing something
farm-related, insurers usually call that a worker’s compensation
issue and decline to pay for treatment.”
Wisconsin’s Office of the Commissioner
of Insurance estimates a very high percentage of policies won’t
cover such claims for that very reason. And Mnuk explains that
few farms have worker’s comp coverage, as state law requires
it only for businesses with six or more employees. “They
can be facing a pile of bills with nothing to help them pay.”
The FHCW addresses that problem directly,
offering coverage wherever a member is, 24 hours a day. (By
law, where Workers Comp is in place, it’s first in line
to pay for job-related injuries.)
Another challenge has been involving a sufficient
number of health care providers in PPOs. Different from HMOs
(Health Maintenance Organizations), PPOs let participants choose
their medical professionals, assuming the member will exercise
due diligence in making sure the professional is in their PPO’s
provider network. Members either aren’t reimbursed or
pay a bigger share for services received from non-network providers.
FHCW addresses this in two ways. First, it
offers the state’s broadest network, with 125 hospitals,
500 care facilities including urgent care, and more than 17,000
practitioners. Second, members served by non-network providers
in circumstances beyond their control can expect ASA to negotiate
with the insurance company on their behalf.
The situation is not so far-fetched as it
may sound. One woman attending a town hall meeting said she
was about to be placed under anesthesia for surgery when she
learned the anesthesiologist was substituting for the one expected,
and wasn’t a network provider. She got a big bill.
Not Just Price
Cooperatives build member loyalty in part by
emphasizing value delivered for money paid. Mnuk says the same
applies with Co-op Care.
“It’s not bare bones; it’s
quality coverage offering a lot of preventive care other policies
won’t pay for,” she says, adding, “We fully
expect to be competitive, but even in those cases where we cost
more, we’ll offer more for the price.”
Responding to a reporter’s question
in Green Bay, Senator Kohl summed it up: “For the first
time, farmers across our state will be able to get a very competitive
health care plan. No one is suggesting it’s going to be
real cheap because those things are out the window. The reality
today is that health care is expensive,” he said.
But with health care “beyond the reach”
of many Wisconsin farmers, Co-op Care can bring them “a
high-quality program at a cost that’s totally competitive
with what other people can obtain” through employer-provided
insurance, Kohl said.—Dave Hoopman
