ALBUQUERQUE, N.M. — Some good, smart, sensible people have organized a health insurance cooperative called New Mexico Health Connections and received a $6 million loan from the federal government to get it up and running by October next year.
Once the start-up is completed, the government will provide another loan, for $64 million, to provide Health Connections with the capital it will need to underwrite health insurance. Companies like UnitedHealth and Lovelace secure such capital through investments, retained earnings and, in the case of UnitedHealth, by selling shares of stock.
Since I know and respect most of the people involved in Health Connections, it makes me uncomfortable to report that, judging from the synopsis of the group’s loan application found on its website and the answers they provided at a press conference earlier this year, there is little evidence that any of the founders knows how to run an insurance company. The synopsis says that among the cooperative’s immediate tasks is to figure out how to build a network of medical providers, decide what products to sell and at what price, figure out ways to manage disease and review provider performance. In short, the synopsis says the cooperative’s first job is to understand what it means to be an insurance company.
Maybe the company’s business plan says more, but Health Connections, concerned about letting competitors know too much, won’t release it.