Evergreen Health Co-op aims to compete with the health care giants

Dr. Peter Beilenson thought fighting the intractable rates of drug use and sexually transmitted diseases in Baltimore was tough. Then the former city health commissioner took on health insurance.

"It's the hardest job I've had," said Beilenson, founder and CEO of Evergreen Health Cooperative, a nonprofit insurer created under the federal Affordable Care Act to offer "patient-centered" care and bring cost-curbing competition to the market.

"We're first new commercial insurer in 20 years in Maryland as far as we know," he said. "It's not easy to have a successful startup in a state that basically has a monopoly."

Beilenson is referring to CareFirst BlueCross BlueShield, the state's dominant insurer. Evergreen is one of 24 such co-ops, officially called Consumer Operated and Oriented Plans, established nationwide, and many of them face similar behemoths.

That fierce competition is the biggest hurdle to the co-ops' success, executives and observers say, as the nascent operations enter their second year of business. But there are a host of other potential stumbling blocks, including name recognition and funding, and the co-ops are responding by boosting their industry knowledge, aggressively marketing their services and cutting premium prices to lure customers.

"They're coming on as strong as they can," said Jonathan Weiner, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health. "No startup organization can be expected to grow more rapidly than they are. But I think it would be tough to judge any organization before three to five years."

Weiner said federal officials gave the co-ops a leg up with billions in federal loans and grants, which competing insurers derided as unfair. But the co-ops only enrolled about 450,000 in the inaugural year, missing government projections by 125,000, largely because of dysfunction on many new health exchange websites such as Maryland's, where the co-ops expected to get their customers.

Evergreen set up a traditional network of doctors in preparation for the business but also opened its own health centers to directly employ health care providers. But it struggled, only getting about 400 customers last year from the troubled exchange.

That near-death experience pushed Evergreen to look to small businesses that it could attract on its own and enroll in groups. So far, about 1,000 small businesses employing about 12,000 people have switched to the co-op.

Studies suggest these customers pose less risk because they previously had health care unlike most of those from the exchanges. A Kaiser Family Foundation survey found that about 60 percent of individuals buying policies on exchanges were previously uninsured for two years or more and in worse health than those who already had insurance.