Obamacare glitches have small insurance co-ops scrambling

Evergreen Health Co-op of Maryland is a nonprofit insurer that got started with a $65 million loan from the federal government. Just days into the Obamacare enrollment fiasco, CEO Dr. Peter Beilenson had to blow up his business plan.

Evergreen Health Co-op CEO Peter Beilenson says the HealthCare.gov website problems have forced his company to revamp its marketing strategy.
Evergreen Health Co-op CEO Peter Beilenson says the HealthCare.gov website problems have forced his company to revamp its marketing strategy.
CBS News

"We actually called a meeting immediately, upon learning of he difficulties with the exchange, of our entire 35-person staff and said, 'Listen, guys, we're going to have to switch our marketing strategy, our strategy of going after folks," Beilenson said.

That means forgetting about individuals for now and instead targeting small businesses the old-fashioned way, with phone calls and TV ads.

The 23 small co-ops across the country that are part of the Affordable Care Act exchanges are intended to provide competition. As they adjust to stay afloat, some analysts worry that Obamacare, as designed, might not.

Their biggest fear is that with the website problems, more of the people who enroll will be the sickest and most motivated. If that happens, insurers would have no choice but to raise premiums and that could cause more healthy customers to flee.

Watch: Did president know Obamacare site crashed before launch?

In the insurance industry, that's known as the "death spiral" -- and experts say if that were to come to pass, the Obamacare business model would collapse.

Beilenson says he only knows for sure of a dozen people signing up for Evergreen so far.

"If we have 1,000 members at the end of the year, that will be a problem, but we thing we're far along in our business planning and we expect to have about 15,000 or so, which would be our break-even (point)," he said.

For context, the Affordable Care law is counting on signing up 7 million people over the next six months. That averages out to about 39,000 people a day.

  • Sharyl Attkisson On Twitter»

    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.

Comments

CBSN Live

pop-out
Live Video

Follow Us

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.

On Twitter