Peter Beilenson dreamed of bright, affordable health-care centers in working-class neighborhoods, staffed with doctors paid a flat salary — rather than per patient — and lifestyle coaches encouraging healthier living.
Tiny waiting rooms would reinforce the message that all patients would be seen quickly. A human would always answer the phone. Specialists could immediately be consulted by videoconference. And there would be free yoga.
Such common-sense approaches, Beilenson believes, will eventually drive down health-care costs. Buried in President Obama’s newly enacted Affordable Care Act, he found a way to test that theory. But because of hard-to-resolve problems with Maryland’s new online health exchange, his experiment may be in jeopardy.
Beilenson, a physician who has spent his career improving public health in Baltimore City and Howard County, used federal loans set aside for nonprofit insurance providers to launch Evergreen Health Co-op, a hybrid creation that provides insurance coverage and health centers.
In the past, such a start-up could never have competed with industry giants such as Maryland-based CareFirst BlueCross BlueShield. Now, the online marketplaces mandated by the health-care law are supposed to make it easier for customers to browse plans and pick what best fits their needs.
Evergreen’s business plan called for at least 10,000 enrollees its first year. But it has signed up only 650 since October, and the enrollment period for individuals ends this month. Problems with the online exchange continue, despite some improvements, and state officials are weighing whether to abandon the system altogether.
Elsewhere in the country, several of the nearly two dozen co-ops that have launched under the federal law are flourishing, signing up thousands through exchanges that work. The co-op that serves Nebraska and Iowa, for example, has about 50,000 sign-ups, four times more than anticipated, while Maine’s has attracted 80 percent of the state’s new enrollees.
The nonprofits have the potential to shake up the insurance landscape, proponents say, by adding low-priced, high-perks plans that can bring down health-care costs. It is exactly what supporters of the health-care legislation had envisioned.
But the poorly operating online marketplaces in Maryland and Oregon have severely curtailed the chances for co-ops in those states to succeed right away. Those problems have given credence to critics who argued from the beginning that the start-up insurers could fail, potentially stranding patients with expensive medical bills.
Evergreen has scaled back its ambitions for now, and Beilenson says it can survive even if only a few thousand patients sign up this year. The sense of optimism surrounding the project has been tinged with uncertainty.
“We did our job,” a frustrated Beilenson said recently, walking past empty exam rooms in his new health center in Baltimore’s historic Rotunda retail and office complex. “And because of things out of our control, we were hurt.”
Beilenson, 54, became a doctor to fulfill a childhood mission that began when a friend died of leukemia. He soon noticed that much of what he was treating seemed preventable: stabbings related to drug deals; amputations caused by complications from diabetes; smokers dying of emphysema.
“There’s got to be a better way,” Beilenson said.
He was named Baltimore’s health commissioner in 1992, working for mayors Kurt L. Schmoke (D) and Martin O’Malley (D), who is now governor. After running unsuccessfully for Congress in 2006, he helped start the Healthy Howard Health Plan, a program that provided low-cost care to Howard County residents who made too much to qualify for Medicaid but not enough to afford most private plans.
Patients were coached to get preventive screenings, exercise, eat healthy foods, quit smoking and limit alcohol. The program is credited with reducing uncompensated emergency room bills in the county.
Out of that experience came the concept for Evergreen, named after the Baltimore coffee shop where Beilenson and his partners came up with the idea, and headquartered in a 150-year-old former cotton mill in Baltimore. Just as the building has been transformed, Beilenson says, so, too, are health-care co-ops trying to remake an industry.
Unlike traditional insurers, co-ops will be governed by policyholders (most co-ops provide only insurance, not health care; Evergreen is an exception). Many target low- and middle-income families that qualify for government subsidies. The coverage that co-ops offer emphasizes preventive exams and screenings, plus general wellness. The goal is high-quality, inexpensive, easily accessible care.
“Up to now,” said John Morrison, the outgoing president of the National Alliance of State Health Co-ops, “every health insurance company has been interested in making money.”
Critics question whether the co-ops are financially viable and able to fulfill their promise to offer quality coverage. If these start-ups fail, some lawmakers and advocates have said, policyholders could be stranded without coverage, and the government might lose millions of dollars in loaned start-up funds. So far, one co-op in Vermont has folded, after the state denied it a license amid concerns that it could not offer competitive rates.
Co-op proponents say private grants and the eventual payment of premiums by customers will cover most funding gaps. At the same time, Morrison and others said, co-ops will make the insurance marketplace more competitive, reducing the amount of money the government has to pay out in insurance subsidies to low- and moderate-income families and individuals.
“Even if all the co-ops went belly up after the first two years, it would not be at a cost to taxpayers,” Morrison said, adding quickly: “That’s not going to happen.”
Originally, Congress was going to offer the co-ops $10 billion in start-up grants. The funding was later reduced, and so far the government has only awarded $2 billion in low-interest loans. A few months before the sign-up process began, a report by the inspector general of the Department of Health and Human Services found that 11 co-ops had start-up costs that exceeded their funding, which could become especially problematic if enrollment lagged behind expectations.
Evergreen took on $65 million in federal loans and secured more than $5 million from health foundations to set up four health centers and advertise their services. Once enough members sign up and start paying their premiums, Beilenson said, the co-op will be self-sustaining — and will grow, opening health centers across the state.
By late November, with Maryland’s online enrollment process barely working, Evergreen had pulled its television ads and slowed its social-media marketing campaign. There was no point in sending customers to a non-functioning site. Instead, the co-op recruited small businesses, offering attractive rates and hoping to land dozens of members at a time.
“We try to be really nimble,” Beilenson said. “That’s one of the benefits of being small.”
Obsessive about testing and statistics, Beilenson has tried logging into Maryland’s troubled exchange 286 times since its debut. He says he has been able to complete the process only six or seven times.
The state created a toll-free number to help residents; Beilenson has called it at least 87 times. After following seven prompts (two minutes and two seconds, he says), a recorded voice gives a predicted wait time — which has ranged from 29 to 77 minutes. Once, he was told it would take 13 minutes to reach a real person, so he waited — for 41 minutes.
Beilenson frequently calls Joshua M. Sharfstein — Maryland’s secretary of health and mental hygiene — to report his observations about the struggling system.
One of his chief concerns is that for five months the state failed to convey the true cost of the insurance plans for most consumers. The online health exchange ranked plans by the cost of their premiums, without factoring in deductibles and other costs.
As a result, Beilenson said, customers would have to scroll far down to find Evergreen’s plans, which often cost slightly more per month but offered more perks and in many cases could keep overall costs down because of lower deductibles.
Most of the more than 38,000 Marylanders who have signed up for insurance through the state exchange so far have opted for plans from CareFirst, which usually offered the lowest monthly payments, although often higher deductibles and other out-of-pocket expenses could drive up the overall cost for patients with health problems.
“This is very distressing,” Beilenson said of the limited pricing information available on the exchange. “If it were a true free market with transparency of cost from the very beginning, we would have done much, much better. . . . This was grossly unfair.”
This month, Evergreen resumed advertising and hopes to attract a few hundred more customers by March 31. After that, Beilenson said he will focus heavily on recruiting businesses, promising to lock in prices for two years. The nonprofit company is trying to be included on the menu of insurance options that Maryland’s state agencies and county governments offer their employees.
As Beilenson walked through the Baltimore health center recently, he stopped to chat with the lone patient who was in that afternoon, a 45-year-old architect who switched to Evergreen because he supports the direction it is taking.
“Well,” Beilenson said, clapping his patient on the back, “thanks for trying us.”