Here’s an interesting article from The Palm Beach Post about Florida’s failed six-year effort beginning in 1993 to fund the start-up of not-for-profit Community Health Purchasing Alliances for small businesses. The effort has some parallels with proposed healthcare insurance co-ops and offers some important lessons. Writes the Post:
Within the first year of the Florida program’s existence, participating employers saw their premiums drop an average of 25 percent. At the CHPAs’ peak in 1998, more than 91,000 people — half of them previously uninsured — got coverage through the alliances.
But by 2000, during Jeb Bush’s first term as governor, the CHPAs disappeared.
Hampered by lawmakers’ refusal to let them negotiate rates, and unable to help small businesses pool their resources effectively, the alliances weakened as insurers withdrew. The alliances also faced resistance from insurance brokers, who made lower commissions on products sold within the CHPAs than elsewhere.
While much uncertainty exists about how health co-ops would work on the national level, critics fear that, like the CHPAs, they would be too weak to provide a counterweight to the powerful for-profit insurance industry.
The wonders of Google also helped me to locate two reports on the status of CHPAs published in 1996 and 1998 by the Florida Legislature’s Office of Program Policy Analysis and Government Accountability.
The 1998 report confirms the assertions in the Post article, adding that the number of uninsured covered through CHPAs in March 1998 represented just 1.6% of the state’s 2.8 million uninsured. The 1996 report provided some color on the funding of the CHPAs:
All of the CHPAs depend on state revenue to cover their operating costs. In fiscal year 1994-95, the $275,000 each CHPA received from the state comprised from 58% to 94% of the CHPA’s total revenue. Without state funds, CHPAs’ expenses in that fiscal year would have exceeded their revenue by $85,000 to $293,000. Although each CHPA has established a reserve from start-up funds, these reserves could be depleted over the next few years if the CHPAs do not bring in additional revenues or reduce their expenses.
Subscribe in RSS Reader
