New 'lean and mean' co-op health plans threaten the 'bigs'

As enrollment in the Affordable Care Act rolls out this week, it's interesting to see how varied the insurance offerings are in different states.

North Carolina has only two insurance options, Blue Cross and Blue Shield of North Carolina and Coventry Health Care of the Carolinas. South Carolina has four: BlueCross BlueShield of South Carolina, BlueChoice, Coventry Health Care of the Carolinas and Consumers' Choice Health Plan. That latter is a newly created nonprofit cooperative, which doesn't exist in our state.

In this article for the Center for Public Integrity, Wendell Potter, a former Cigna executive-turned-whistle blower, suggests this is the "beginning of the end of the health insurance industry as we know it." And he refers to co-op plans like the one in South Carolina.

Here's an excerpt:

"One of the things apparent right off the bat is that some of the best deals will be offered by nonprofit health insurers, including the brand new co-op plans that will be available in about half the states. These plans will be lean and mean. They won’t have the enormous overhead costs of the big for-profit insurance corporations that I used to work for, and they won't have to charge extra for coverage just to satisfy the profit demands of shareholders. They won’t have shareholders.

"If you’re wondering why Aetna, Cigna, Humana and UnitedHealth Group, four of the biggest for-profits, are not planning to participate in many of the marketplaces, it’s because they know they cannot be competitive and still satisfy the profit expectations of their shareholders.

"Before long both Wall Street and Main Street will catch on to the idea that the big for-profits are bloated Goliaths that can and will be taken down by the new Davids of the insurance world. The value proposition held out by the bigs for years — that their armies of underwriters, marketers and 'medical management' specialists are essential — will be blown to smithereens.

"The bigs have to know this, and it explains why we are seeing some of their desperation tactics. Like the letter Aetna is sending to some of its policyholders encouraging them to renew early this year so they can avoid the 'big changes' that are on the way."