A smorgasbord of options and lower prices for consumers were two of the chief selling points for President Barack Obama as he promoted his overhaul of the nation's health insurance industry, predicting Americans would see "competition in ways we haven't seen before." Companies were even started as a way to encourage innovation and competition, namely 23 consumer-run, co-op insurers created with the help of $2 billion in federal loans.
But rather than promote competition, the co-ops and smaller nonprofits in some states have languished behind major insurers, attracting in some cases minuscule shares of the market. While Obama celebrated an early projection this week of 7.1 million enrollees under the Affordable Care Act, it's too early to say whether the law ultimately will foster sufficient competition to keep premiums and deductibles affordable for consumers.
Many of the nonprofit insurers are startups and have faced challenges as they tried to attract customers, including: the computer problems that plagued many of the signup websites; plans that weren't priced to compete; and a failure to develop brand recognition, due in part to restrictions on advertising and lobbying that were a condition of the co-ops accepting the federal funding.
"Between no lobbying and no direct marketing, that's what you get," said Ken Lalime, CEO of HealthyCT, a co-op in Connecticut. "It's kind of tough to get your name out there and get exposure."
Like nonprofits in other states, HealthyCT watched in recent months as customers chose big-name insurers on the marketplaces created under the federal health care law. Before Monday's enrollment deadline, HealthyCT had 3 percent of signups in the state.
Just 5 percent of enrollees in Washington state's marketplace had chosen community nonprofit insurers by the end of February. In California, more than 95 percent of people signing up for coverage went with four major insurance companies rather than seven regional or community nonprofits. About 97 percent of Oregon's enrollees have selected plans offered by the larger insurers in the state while 3.3 percent chose the two co-ops. In New Mexico, an estimated two-thirds of those signing up selected one of three major insurers. And through February in North Dakota, where Blue Cross Blue Shield had 80 percent of the market before the law went into effect, just 516 people chose coverage offered by the nonprofit Medica.
"When you had the lion's share before, you're going to have the lion's share again," said Neil Scharpe, a service contract specialist with North Dakota Center for Persons with Disabilities, who coordinates enrollment outreach workers.
The federal government, which operates the insurance marketplaces for 36 states, has not released data on what type of insurers people enrolled with on those marketplaces, said Courtney Jenkins, a spokeswoman for the Centers for Medicare and Medicaid Services. In the absence of federal data, The Associated Press surveyed the status of nonprofit insurers in numerous states, primarily those running their own marketplaces, or exchanges. In some states, some of the larger insurers are also not-for-profit.
And while the federal government has loaned $2 billion to the 23 co-ops, officials are not expressing concern with their enrollment figures or their ability to repay the loans. Jenkins said her agency is encouraged so far but will be monitoring the co-ops' progress.
The struggles have been pronounced for the newly created co-ops, and some congressional Republicans have voiced concern about their long-term financial viability. HealthyCT, for example, only ran TV ads after it began bringing in money from premiums. Near the end of March, it had signed up about a quarter of its original, modest goal of 10,000 customers. The two major insurers on the state's exchange, including Anthem Blue Cross Blue Shield, had 97 percent of the market.
For Maryland's Evergreen Health Co-op, lackluster enrollment numbers - about 650 people had signed up for coverage through early March - were blamed on technical issues with the exchange's website. Until recently, the exchange failed to even give shoppers the actual costs of Evergreen's policies that included out-of-pocket expenses.
The slow starts prompted some smaller nonprofits to adjust their enrollment goals and change their business plans. HealthyCT is now selling insurance outside the state's marketplace to larger employers and hopes to educate the public about its patient-centric model of care in time for the next open enrollment in November. Evergreen changed gears to focus more on offering small group insurance plans rather than individual ones and enrollment picked up, said Dr. Peter Beilenson, its CEO and president.
Beilenson said he's confident the added business will enable his co-op to enroll greater numbers of people with less effort, and he hopes Evergreen will be able to return to its priority of offering high-quality care to working and middle class families, once Maryland's enrollment system is improved.
"I would hope that it works vastly better next year than this year," he said.
But if enrollments do remain low, there are some protections over the next several years. The law included temporary programs that basically provide money to participating insurers to help them financially balance the risk and offset rising insurance premiums, said Dylan H. Roby, director of the Health Economics and Evaluation Research Program at the UCLA Center for Health Policy Research.
The competition to date might not be what Obama envisioned but it's also not fatal to the exchanges because the law is so new. But all nonprofits selling plans on the exchanges, including the co-ops, will need market share eventually, acknowledged Roby.
Sharp Health Plan, owned by a San Diego regional health care provider, has received about 10,000 applications, or a 10 percent market share. CEO Melissa Hayden-Cook said the financial viability of competing on the Covered California health exchange won't be clear until months after the first year people have policies.
"It takes time to know how the business model is going to perform," she said. "But with federal protection to help offset some of those risks, we're cautiously optimistic."
Most people buying plans through the exchanges are getting subsidies that lower their premium costs, but deductibles remain costly, so the enrollment numbers will likely grow as people become more aware of the law's requirement to have coverage or risk larger and larger financial penalties.
"You'll probably see more people biting the bullet and signing up," Roby said.
Some states' smaller nonprofits stand out as bucking the trend. Nonprofits and regional insurers appear to be competitive in Wisconsin, though the companies have long histories in the state, and thus name recognition. And nearly 80 percent of everyone who signed up on Maine's exchange through the beginning of March, or about 20,000 residents, chose the one nonprofit co-op offering plans, Maine Community Health Options.
Ken Voorhees, of Litchfield, south of Maine's capital of Augusta, said he chose the co-op's plan over Anthem Blue Cross and Blue Shield for the $130 a month savings over his previous coverage, its benefits, including a health coach, and its status as a local business.
The 58-year-old, who operates a business that builds timber frames, said he feels like his money is more likely to trickle down to the services he receives, rather than funding corporate executives' salaries.
"It's nice to keep the money in the community," said Voorhees.