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How a health insurance group purchasing effort broke up

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A health insurance purchasing team in Massachusetts tried a strategy from the past and says it got poor results.

Heather Cloran, an official at the Massachusetts Health Connector, the Bay State’s state-based Patient Protection and Affordable Care Act (PPACA) exchange, talked about the state’s disappointing 2016 student health insurance procurement effort at a recent exchange board meeting.

The exchange tried to organize a joint health insurance purchasing effort for a group of public colleges and universities.

The public colleges and universities need help with holding coverage costs down, in part because PPACA coverage expansion efforts reduced the number of students enrolling in the schools’ health insurance plans by 45 percent between the 2013-2014 academic year and the 2014-2015 academic year, Cloran told the board, according to a written version of her presentation on the exchange website.

See also: Top 5 student health issuers: Revenue soars

In the past, before PPACA public exchange system and private exchanges came along, chambers of commerce and other organizations tried to help members save money on health insurance by setting up health insurance “purchasing coalitions” or “purchasing cooperatives.”

See also: Georgia Approves Health Care Buying Coop

The joint buying efforts often fell apart when lower-risk members found they could get cheaper coverage by buying on their own.

The 2016 college health insurance buying coalition met the same fate:

Managers of the procurement effort found that the arrangement would have held the participating universities’ increase to 8.1 percent but saddled the participating community colleges with a 21.8 percent increase, Cloran reported.

By going out on their own, the community colleges cut their average annual premium 6.3 percent, to $1,536.

One state university ended up with an increase of 24 percent, to $2,292, but three other universities cut their premiums by about 1.9 percent, and one cut its premiums by about 3.9 percent.