Roughly Speaking Dan Rodricks: Commentary and conversation on life in Baltimore, Maryland and the USA

The might-have been of Peter Beilenson's health co-op

Leaving for a new job in his native California, Dr. Peter Beilenson, one of Maryland’s — and, particularly, Baltimore’s — most effective public servants of the last three decades, closes out his time here with frustrating irony. So rich is this irony that Beilenson could write a book about it, and he’s doing exactly that.

The irony goes like this: The Trump administration, in its role as saboteur of the Affordable Care Act, is doing in the extreme exactly what the Obama administration refused to do in moderation — that is, adjust the landmark health insurance law to allow Beilenson’s masterpiece to survive.

Beilenson’s masterpiece was Evergreen Health, one of 23 nonprofits established across the nation under the ACA to offer a new and affordable choice for individuals and families seeking health insurance.

After serving for many years as health commissioner of Baltimore and, later, as the health officer for Howard County, Beilenson created the Evergreen cooperative and became its CEO. The co-op received a $65 million startup loan from the federal government and, in 2013, won approval to compete with private insurers to sell health policies in Maryland.

Evergreen was pioneering. It hired doctors, nurses, health coaches and social workers to staff primary-care centers at four locations. It made smart use of telemedicine and Skype to consult with specialists and to avoid unnecessary procedures, visits to emergency rooms and hospital stays. It emphasized prevention by getting Evergreen members to eat better and exercise more. It offered mental health services, too.

The goal was to bundle best practices, save money and make people healthy. It worked. By 2015, Evergreen showed revenues running ahead of expenses — one of only three ACA nonprofits to do so by then — and its membership continued to grow to a peak of 40,000.

But, despite Evergreen’s early success — or, rather, because of it — the federal government forced the co-op to pay millions of dollars in so-called “risk adjustment” to the largest health insurer in the Maryland market.

At the time, CareFirst BlueCross BlueShield carried reserves of $1.5 billion, and yet, under the ACA, it was due $24.2 million from three-year-old Evergreen. That represented more than a quarter of the co-op’s revenue in 2015 and took a big bite from its reserves.

"This is an outrageous sum of money being sent from one insurer to another that doesn't need it and doesn't deserve it,” Beilenson told The Baltimore Sun in 2016. By then, Evergreen had resorted to suing the Obama administration, arguing that such huge payments could threaten the co-op’s future.

When it became law in 2010, the ACA provided for risk adjustment to protect insurers, like CareFirst, that took on sicker and more expensive members, including those with pre-existing illnesses.

Under the ACA, the system used to measure customer health found that the thousands of people Evergreen insured were healthier than the hundreds of thousands covered by CareFirst.

In an interview last week — episode 416 of the Roughly Speaking podcast — Beilenson argued that the system was flawed and “grossly unfair,” that it could be skewed to make a well-established company’s customers appear sicker than they really were. Generally, he said, small firms, with their startup costs, were at a huge disadvantage.

Beilenson, a Democrat and outspoken supporter of the ACA, said the Obama administration could have changed the risk-adjustment formula, or delayed it or phased it in. The administration refused. Evergreen lost its lawsuit and, by last year, it was out of business. This week, Peter Beilenson moves to Sacramento to become that city’s director of health services.

“Here’s the irony of ironies,” Beilenson said: Five months ago, a federal judge in Albuquerque ruled in favor of a co-op in New Mexico — the same ruling, based on the same arguments, Evergreen had sought from the U.S. District Court in Baltimore.

The judge agreed with New Mexico Health Connections, a co-op like Evergreen, that the system used to calculate risk payments was flawed.

According to the Albuquerque Journal, the co-op had received an $8.9 million risk-adjustment bill last year, a sum that brought it to the brink of state control. Now, however, the federal Centers for Medicare and Medicaid Services have been enjoined from forcing the payments, and the Trump administration, in its zeal to undo the ACA, appears pleased to go along with the New Mexico ruling. Last month, CMS announced a freeze on billions of dollars in risk adjustment payments.

That sounds predictably extreme, something that could further destabilize health insurance markets. It’s not what Peter Beilenson wanted or needed for his masterpiece. Instead, moderate changes in 2016 by the Obama administration likely would have helped Evergreen Health survive. But that did not happen, and Evergreen, a progressive innovation in healthcare, is gone. So are most of the other ACA co-ops, to the great detriment of the many Americans who need affordable insurance and deserve choices when they shop for it.

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