More than a year after Massachusetts passed a law allowing for the state’s first cooperative insurance groups to operate in the state, two organizations have been certified as purchasing cooperatives. The Retailers Association of Massachusetts and the Massachusetts Association of Chamber of Commerce will now be able to negotiate with health insurance companies in the hopes of producing more affordable insurance products. The groups hope to attract thousands of new consumers with these products and alleviate some of the financial burdens that have been damaging the state’s economy.
Small businesses have supported a group purchasing initiative for more than ten years. Advocates for a cooperative system claim that small companies suffered in the traditional insurance market because larger companies held more sway with insurance companies. Large companies and corporations are often self-insured, relying only on insurance groups to manage claims. This could lead to small businesses paying more for coverage as insurers attempt to shore up their losses.
The state’s first certified groups are already in talks with insurance providers for new, low-cost policies. The law passed in 2010 allows the state to form six cooperatives in total, which will account for 85,000 members. The cooperatives will be focused on the small group insurance market in the state. Thus far, state insurance regulators have thrown their support behind the state’s first cooperative group, encouraging insurers to write policies befitting the needs of the market.