How an Obamacare remnant survives and prospers in Montana

Helena-based Mountain Health Co-op is one of just three Affordable Care Act-created co-ops still alive nationwide, and now covers about 55,000 people in Montana, Idaho and Wyoming.

By Mike Dennison MONTANA FREE PRESS

As health-insurance cooperatives created by “Obamacare” collapsed like dominoes in the mid-2010s, the Montana co-op faced its own multimillion-dollar chasm, created by an obscure political deal in Washington, D.C.

But the Helena-based Mountain Health Co-op scratched out a $15 million loan to stay afloat — and this month hit its highest customer numbers ever, as one of just three Obamacare-created co-ops still alive nationwide.

Co-op CEO Richard Miltenberger, a former health-insurance consultant who played a key role in the co-op’s formation a decade ago, said it now covers about 55,000 people for 2023 in Montana, Idaho and Wyoming.

In Montana, the co-op covers some 35,000 people, still a relatively small piece of the overall private health insurance market in the state.

Yet in the individual market — people who buy their own health insurance, because they have no employer-based coverage — Mountain Health Co-op has almost 40% of the Montana market, second only to the state’s dominant insurer, Blue Cross and Blue Shield of Montana.

Miltenberger said the co-op has survived and prospered while most others failed because of  savvy management, a thirst for health insurance competition in its three-state region and its willingness to give customers some attractive benefits, such as free coverage of 250 “preventative drugs” including insulin and blood-pressure medicine.

“We’re the only company that I know is doing it,” he said of the scope of the preventative-drug benefit. “The reason we can get that done is because when the board of directors sits around this table once a month, they’re members … They’re not about maximizing dollars flowing to Wall Street or Chicago or … anywhere else.”

State Insurance Commissioner Troy Downing, a Republican, said he considers the co-op a “viable player” that has increased health insurance competition for Montanans.

“We’re supportive of that and want them to continue to succeed,” he said in a recent interview. “They’ve worked with the regulators, here and in other states, to make sure they have reasonable growth [and a] sustainable business.”

Downing also notes that a state reinsurance program supported by his office shrank premium increases for the three companies selling in Montana’s individual market (Mountain Health, Blue Cross and PacificSource).

Mountain Health Co-op is one of 23 state-based health insurance co-ops launched in 2012, financed by loans from the federal government as part of the 2010 Affordable Care Act, the massive health-care reform bill known as Obamacare.

John Morrison, Montana’s Democratic state insurance commissioner at the time, said the ACA’s co-op language was something of a political throw-away, meant to placate reform advocates upset that a nationwide “public option” health insurer had been axed from the bill.

“It was initially enacted as window-dressing to the ACA — a rubber plant that was supposed to just sit on the window sill,” he said. “Instead, it started blossoming.”

More than 60 potential co-ops applied for the loans, surprising even those who supported the idea.

In Montana, Miltenberger and his then-insurance-consultant partner Jim Edwards felt Montana needed competition in a market dominated by Blue Cross. They met with Morrison, who was supportive and later became the head of the co-ops’ national association.

The Montana Health Co-op was born (it changed its name to Mountain Health in 2015), first offering policies to individuals in 2013 on the internet “marketplace” created by the ACA.

The Montana co-op expanded into Idaho in 2015 and Wyoming in 2021, becoming only the second company offering individual policies on Wyoming’s marketplace.

As part of Obamacare, the co-ops were promoted as a new player that might offer unique insurance products and inject some badly needed competition into markets with few options.

Mountain Health isn’t necessarily beating its competitors on price. Most policies on the individual marketplace are similar, price-wise, and often have high deductibles, up to $8,700.

But Mountain Health offers some rare add-ons, Miltenberger said, like the preventative prescription-drug coverage and dental and vision exam coverage, to a medical policy. Mountain Health also sells Medicare-supplement policies to individuals.

While the co-ops initially appeared headed for success nationwide, a pair of omnibus budget deals between the Obama administration and Republicans in Congress dealt crushing financial blows to many co-ops and potential co-ops.

The first deal, in 2012, capped the number of co-op loan recipients at 23, halting applications still in progress. Perhaps the biggest hit came in 2014, when the Obama administration agreed to drastically reduce something called “risk-corridor” payments to all health insurers selling on the online marketplace.

That multibillion-dollar yanking of expected funds sank many co-ops — and nearly did in the Montana co-op, which saw a promised $55 million evaporate in 2015.

Then-CEO Jerry Dworak, who had worked many years in Idaho, saved the co-op by securing a $15 million loan from a Boise hospital system, which wanted to keep the co-op as an insurance competitor in that state.

“Without that loan, we would have had to, at a minimum, withdraw from Idaho and possibly do what a lot of other co-ops did, which was just fold up our tent and go home,” Miltenberger said. “It put a real hole in our boat, in terms of solvency.”

Mountain Health Co-op’s survival also enabled it to recoup most of that lost $55 million.

In 2018, the health co-op in Maine sued the federal government to recover the risk-corridor money, which had been promised as part of the ACA.

That lawsuit eventually succeeded in 2020, culminating with a U.S. Supreme Court opinion that led to the largest civil liability ever awarded against the federal government: $12 billion, paid to  health insurers across the country who sold policies on the ACA’s online marketplace.

Mountain Health Co-op used its share of those funds to bolster its reserves and gave customers a $3 million premium rebate in late 2020, Miltenberger said.

Health-care reform advocates are pleased that this small piece of health care reform has survived and flourished in Montana and a few other spots‚ but say it’s not exactly cause for celebration.

Powerful incumbent health insurers, aided by Republicans and Democrats in Congress and the White House, worked the deals that killed off most of the co-ops, said Peter Beilenson, the former CEO of the defunct co-op in Maryland.

With those deaths, a lot of potential innovations in coverage and care fell by the wayside, and the current political climate won’t be delivering new reforms any time soon, he predicts.

“It was amazing that, even in the face of all of these obstacles, that several of us did survive,” Beilenson said.