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.