Co-op Thinks Big for Small Business Health Insurance

by Kevin Casey on November 19, 2010
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Tired of hearing about health care? It would be tough to blame you. The headlines seem to trumpet nothing but certain doom: skyrocketing costs, prolonged political battles, and tens of millions of uninsured Americans.

Rapidly rising premiums touch a particular nerve with small businesses: You want healthy, happy employees, and you need to offer a solid benefits package to attract and retain talent. But when every dollar counts, quality health insurance can be a budget buster.

So how about some good news for once?

Look to South Carolina, where yesterday the state’s first small group health insurance cooperative opened its doors for business — small business, to be precise. The South Carolina Healthcare Cooperative is a private, non-profit group that enables small businesses to pool their resources and contract for health insurance plans as a single, larger group — at lower rates. In simple terms, the cost of a group health plan goes down as the size of the group goes up. As one unit, the co-op’s members could have access to the types of discounts usually reserved for much larger companies. South Carolina businesses with 2 to 50 employees are eligible to participate.

The co-op, the first of its kind in South Carolina and one of only a handful nationwide, is the product of 20-year-old president and CEO Cooper Littlejohn. He put the idea, enabled by state legislation passed in 2008, into motion while working as a summer intern at Nuttall Insurance Agency in Seneca, SC. The co-op recently completed the state regulatory agency’s year-long licensing process. It receives no government funding or subsidies.

Though the cooperative concept is not necessarily new, the South Carolina approach could see copycats elsewhere — if it’s successful. That will depend largely on the number of businesses that sign on: as reported here, estimates on the number of covered people needed to get the co-op off the launching pad range from 1,000 to 5,000, and as many as ten times that to keep it running long-term. South Carolina is home to roughly 80,000 small employers, according to the SBA.

On paper, it seems like a no-brainer for small firms struggling to find affordable insurance for their people. At a time when the rhetoric swirling around small business seems to be increasing in volume, it’s a good example of the brass-tacks entrepreneurial spirit: sometimes it’s healthy to think big, no matter your actual size.

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