Wisconsin farmers, small businesses
benefiting from new health-care co-ops


By Anne Todd,
USDA Rural Development

isconsin is the first state to use the power of cooperatives to bargain for adequate, costeffective health insurance for agricultural producers and small businesses. The concept of using group purchasing power to bargain for lower health insurance rates is not new. However, prior to the enactment of Wisconsin’s landmark Co-op Care legislation, only large organizations had the ability to conduct these negotiations. Co-op Care extends those market concepts to help smaller scale businesses, including farmers and the self-employed.

The Farmers’ Health Cooperative is Wisconsin’s first health purchasing co-op dedicated to farmers and agribusinesses. Its formation was made possible by the Co-op Care law. Like other co-ops, the Farmers’ Health Cooperative will be owned and governed by its members, who will be directly involved in future financial and benefitpackage decisions. The initial cooperative board includes six producers and three staff members of the Wisconsin Federation of Cooperatives (WFC), the statewide advocacy association for cooperative businesses.

Health co-op strikes chord with producers
After three years of extensive development work by WFC and a number of dairy, farm supply and farm credit co-ops, FHC health insurance plans became active on April 1. Within just two days, thousands of people had already requested information about the program, says project coordinator Katie Mnuk. “This shows a clear demand from farmers and agri-businesses for affordable health insurance coverage,” says Mnuk.

The co-op’s mission is to provide Wisconsin’s 70,000 farmers — and the agri-businesses that directly serve them — with access to affordable, comprehensive health insurance. Farmers’ Health Cooperative is designed to use its power as a cooperative entity to bargain for cost-effective coverage and increase health care options for its members.

About 35 town meetings were held across the state during the spring to discuss the plan with producers and rural small business owners. WFC President and CEO Bill Oemichen says attendance was well beyond expectations. In the Green Bay area alone, more than 600 producers attended meetings during a three-day period.

After only five weeks of marketing the co-op program, the number of producers and agricultural businesses that had already signed up and paid their first insurance premiums was rapidly nearing the number projected for the first year, Oemichen noted.

The co-op’s marketing effort began Feb. 19 with a press conference at the Wisconsin state capitol led by U.S. Senator Herb Kohl, Governor Jim Doyle and Oemichen.

Aetna, one of the largest U.S. health care insurers, has been selected to provide the health insurance for the cooperative. Agri-Services Agency of New York (ASA) has been selected as the plan administrator. ASA is a subsidiary of Dairylea Cooperative. Now that the plans are active, individual members can begin reaping the benefits of that group purchasing power, backed by the expertise of a healthcare industry leader as their provider.

FHC offers members a choice from among six different enrollment plans, with deductibles ranging from $300 to $5,000. Mnuk says these plans offer more comprehensive benefits at lower prices than most could buy under an individual plan. FHC members may choose from traditionally structured, preferred provider organization plans, or take advantage of the tax benefits available through coverage under one of two high-deductible health savings account compatible plans.

The various insurance products have been tailored to meet the specific needs of the farming community, and include coverage for injuries that occur on the farm. Also included is coverage for $500 of preventive care per member per year, maternity care and prescription drug coverage.

One of the co-op’s goals is to provide more predictable, stable rates for its members. To be eligible to join the co-op, applicants must be between the ages of 18 and 64, live or work in Wisconsin, and derive at least 66 percent of their income from farming.

An initial capitalization payment is required by state law, and is returned after members have been enrolled for three years. Other than that, the co-op charges a modest, $2 monthly membership fee that is collected as a portion of members’ health insurance premiums.

Genesis of legislation
During the past several years, limited access to health care and rising costs have become paramount concerns for rural families. Often, producers’ only option has been to buy individual health insurance plans that are significantly more expensive than the group plans available to workers in other professions.

Because farming can be dangerous (American farmers have the third-highest rate for non-fatal injuries among all occupational groups) and many producers do not carry workers’ compensation insurance, the insurance industry considers farmers a high-risk group. Several studies show that Wisconsin farmers experience a high rate of work-related injuries, and that as many as 82 percent of them don’t have access to 24-hour medical care because of restrictions in their policies.

WFC leaders felt that the situation was a crisis, and that a development and formation of Wisconsin health care co-ops, and progress resumed with renewed vigor.

The Co-op Care goals are: Under the Co-op Care law, the cooperative’s health insurers must provide insurance coverage for a minimum of three years. This is a unique provision that was intended to provide stability to the cooperative.

Healthy Lifestyles Co-op seeks lower costs
The mission of the Healthy Lifestyles Cooperative (HLC), based in Green Bay, is to stabilize insurance rates through cooperative purchasing, while also emphasizing the need for members to take personal responsibility for their well-being by maintaining a healthy lifestyle. The focus on wellness is what makes HLC unique.

Insurance plans sponsored by HLC became active on Jan. 1, making it one of the earliest health care co-ops in the state.

HLC serves a primarily urban area of northeast Wisconsin. Like the Farmers’ Health Cooperative, HLC also uses the collective power of a group of employers, who pool their resources to purchase coverage as a group. Membership is open to self-employed people, for-profit or nonprofit corporations, trade or labor organizations, municipalities or any partnership that does business in, or is principally located in, Brown County.

To be eligible, members must also belong to a local farm cooperative, the Green Bay Area Chamber of Commerce or a nonprofit resource group.

HLC began negotiating with carriers last summer to determine which would provide the best overall program. Last September, the co-op chose Destiny Health. Destiny offers an array of health savings account-type plans or health reimbursement arrangements for the co-op employer/members.

Although not well known in the United States, Destiny has been successfully administering consumer-directed wellness programs since 1992, starting in South Africa. It entered the U.S. market in 2000. Destiny’s innovative program motivates clients to participate actively in their health care, and rewards them for making healthy choices.

Destiny’s incentives measure is called the Vitality program, and members earn “Vitality Bucks” which can be redeemed for rewards of their choice. Vitality Bucks can also boost the value of members’ health accounts with Destiny.

Clients are required to take an annual health-risk assessment test to determine their general health and identify areas for improvement. Clients are provided with a personal health nurse/coach at no extra cost, who helps them develop personal wellness plans that will reduce future health risks and health costs.

As of April, 135 employer/members were participating in the program, and more than 1,800 employees have already taken their initial health-risk assessments test, a 90-percent response rate. In late April, HLC announced that it is seeking members for a second pool.

Effects of Co-op Care initiative
Co-op Care backers say the law is having a spill-over effect, in which competing insurance providers have lowered premiums and raised benefits for producers in response to the packages offered through the FHC. They note that one (non-cooperative) carrier has begun advertising 24-hour coverage for farmers, similar to the coop’s plan.

Oemichen, who is also president and CEO of the Minnesota Association of Cooperatives, notes that Minnesota is close to passing similar health-purchasing cooperative legislation.

The Co-op Care legislation has fostered development of a number of health purchasing co-ops in various stages of development around the state. Other projects (in addition to HLC) in the planning stages include a cooperative for Wisconsin physicians, and cooperatives providing health insurance coverage for small businesses in several areas of the state.

According to Oemichen, Wisconsin’s novel approach of using cooperatives to increase access to quality health care is attracting significant interest from insurance companies, even some foreign companies. WFC has received a number of inquiries from elected officials and interested parties in a number of other states.

To learn more about Co-op Care, visit the WFC Web site: www.wfcmac.coop. FHC’s website is: www.farmershealthcooperative .com; HLC’s Web site is: www.healthylifestylescoop.org/.

















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