TexHealth…Local Government as Social Venture Fund?

logo-texhealth-central-texas

TexHealth Central Texas is a new non-profit healthcare plan that bills itself as “low-cost healthcare coverage your business can afford.”  The plan focuses on business under 50 employees and aims to ensure 2500 people over the next three years.  The plan is actually a part of ChoicePlus Network of UnitedHealth.

Here are the plan details from the Statesman:

The employee and the employer each pay an average of $122 in monthly premiums — dependents aren’t covered — and the annual deductible is $250. Co-pays for primary care are $20 and specialty care visits are $40, while the limit on drug benefits per year is $1,000, and for hospitalizations, it’s $100,000.

That helps explain the low cost. Also check out who the start-up funders are:

The Travis County Healthcare District, which has for several years been promoting the idea of creating a low-cost health insurance plan for small businesses as a way to reduce the growing ranks of the uninsured, contributed $339,450 to get the program started and to help cover administrative costs, Rodriguez said. The Williamson County Commissioners Court approved $80,000, and Hays County commissioners on Tuesday are expected to add $32,550, Rodriguez said.

The interesting development is that the Travis County Healthcare District is acting as a social venture fund of sorts.  TCHD will not be administering the plan, and it will only provide financial backing for a few years until the plan is self-sustaining.  This is not the only example of a local government creating (as opposed to saving a la GM) a competitor in the private marketplace. For example, Flexcar – the original car-sharing service that merged with Zipcar – was originally started by King Metro and some local socially-minded investors.

Typically, we think of governments as providing public goods by operating bureaucracies.  In general, those bureucracies provide services in those areas  were there is a market failure to provide what is needed (services to the mentally ill) or where a single public entity has clear cost and command advantages (police.)  Further, government provides the “rules of the game” through regulation.  But in general, it is not in the habit of launching products.

The idea of government making resource allocation decisions through the lens of a social venture fund is intriguing and creates what might appear as contradictory currents given contemporary left-right ideologies.  On the one hand, it’s hard to sustain a big bureaucracy that produces high touch products – such as public education and public housing – in a drab monolith that aims for the median user.  We’ve seen some of these changes in places like D.C. with a significant number of charters that cater in all directions with some great successes and some spectacular failures (like any other marketplace.)  On the other hand, it seems that a local government acting as a social venture fund is going to put up seed money for a wide swath of projects where the marketplace is perceived as sub-par.  Hence, TCHD funding a new healthcare plan.

It is hard to figure out exactly what local government would look like if it took a venture fund approach and both experimented with changing the organizational form of its service delivery bureaucracies and also saw itself as mandated to evaluate places where markets were failing and competition required jump-starting through new product entry.  I think many will condemn THCD for starting us down the slippery slope and would prefer that public entities stay out of influencing the marketplace with taxpayer dollars.  The reality, though, is that government already shapes the market, so I am merely trying to figure out what is the optimal shape of involvement.

For now, we’ll have to keep track of TexHealth for a bit before we draw any strong conclusions.

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4 Responses to TexHealth…Local Government as Social Venture Fund?

  1. You want a conclusion? I don’t care who funds it there is no place on the market for a extremely limited health plan…’NOT INSURANCE’….That is why we carry insurance…in case you are faced with a major medical situation you want to insure you will receive treatment. Most all private hospitals,depending on the treatment will not accept you if they forecast that the treatment that you need will exceed the limit of your health plan.You are also right about funding. That’s why insurance company’s are regulated by the Texas Dept. of Insurance to insure the company that is insuring you for $5,000,000 is sound to PAY YOUR CLAIMS. This plan is not regulated by the TDI. Even as limited as it is by the way this is set up I would want to find out what reserves do they have to date to pay my claims.I the plan goes bankrupt were would that leave me and my preexisting conditions and by being on this plan ,developing a condition that the individual major medical market will decline you now.It would be a better deal to have a $10,000 deductible with a $5,000,0000 life time max than to limit your health treatment to $1,000 a year.It just takes people to trully help the public understand what health insurance is about and what it is used for which is a membership card to get you into a private club they call a hospital.They do not know if your paying $1 or $500 for it all they want to know is if they are looking to lay out $500,000 worth of medical treatment on you how are they going to get paid. And they will work with you at a $10,000 deductible but if they see it has a massive cap on your care they are going to sent you back to the community hospital along with all the other uninsured.The prem. on a high deductible health plan is cheap.

  2. Lyna says:

    Get ready to see massive confusion and manipulation now that the public has awoken to the cost and quality issues in US Health Care…. I woud much rather have a single-payer system (adminsterd by federal regulations, you know like the US Military we are so proud of, Medicare, etc.) and not spend my precious spare time fighting with a health insurance company that exist to make a profit by not paying my claims… or worrying when they might find out I had acne as a teen and didn’t disclose it.

  3. Ann Kitchen says:

    Everyone

    I’d like to provide some clarification to address a few of the questions raised here.

    TexHealth Central Texas is a nonprofit, community based program that was created by a group of 60 healthcare, provider, and community leaders in Central Texas. The HealthCare District was one of those leaders, but did not create the program. It is part of a statewide effort to help provide coverage for uninsured workers in small businesses

    It is an option for small businesses who have no other options – because it offers affordable health coverage for small businesses that have not been able to afford coverage through traditional insurance companies.

    It is a nonprofit corporation with a community Board of Directors. The reserves meet TDI requirements

    The benefit package covers the full range of benefits – physician, hospital, medication, x-ray, lab, mental health etc. It is not an “extremely limited plan” as was the concern raised by one commenter.

    The program is not a substitute for health reform – it is a nonprofit health coverage program that helps businesses right now, and will fit into a larger health care reform, that hopefully we will have in the future.

    Please feel free to contact TexHealth Central Texas if you have any questions about the program.
    http://www.texhealthcentraltexas.org

    Thank You
    Ann Kitchen

  4. What are your thoughts now, after reading Kitchen’s comments?

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