New Jersey nonprofit bucks the trend of skyrocketing health insurance costs

One New Jersey nonprofit is bucking the trend of skyrocketing health insurance costs while Congress wrangles with health care reform. Through an entrepreneurial business model, self-insurance and the use of a Voluntary Employee Benefits Association (VEBA), Community Access Unlimited (CAU) has limited increases in health insurance costs to just 3.3 percent in each of the last five years and saved more than $1 million during that time. CAU will have a 0.0 percent increase in 2010 and will expand coverage.

The agency is the only social service nonprofit in the nation to employ this model, according to executive director Sidney Blanchard.

CAU's success at containing health insurance costs compares to a national increase of 5 percent and generally higher hikes for nonprofits, the nation's fourth largest employee sector, according to the Johns Hopkins University Listening Post Project. More than 35 percent of U.S. nonprofits reported increases of 11 percent or more in health insurance costs during the past year, while one in three increased employee copayments, 14 percent decreased drug coverage and 8 percent reduced ancillary health services, according to the project report.

CAU provides full, comprehensive health insurance benefits to 250 full-time employees, and their families, with no employee premium payment. In addition, CAU continually adds benefits to its plan, including in 2010.

CAU, located in Elizabeth, New Jersey, supports people with disabilities and at-risk youth, serving more than 3,500 individuals each year. Blanchard founded CAU in 1979 with a $90,000 grant to move 20 adults with developmental disabilities from state institutions and place them successfully in the community.

Blanchard possesses a unique mix of social commitment and cutting-edge, entrepreneurial business savvy and developed a business model that adheres to both mission and monetary realities. For example, the agency was one of the first nonprofits in the nation to use federal low-income housing tax credits to acquire property for community housing for members.

CAU's health insurance premiums began doubling and tripling in the burgeoning health care crisis of the late 1980s, according to Blanchard. Insurance costs were draining essential resources and undermining the agency's mission to help its members.

"I learned the golden rule, those who have the gold make the rules," he said. "Never again were we going to have people in need exposed because of our negligence in learning and reacting to market forces."

CAU also was losing one of a nonprofit's few advantages in attracting and retaining quality employees.

"As a non-for-profit we are committed to being very efficient with money," Blanchard said. "At the same time, employing highly trained people is very difficult when they are not well-paid. Benefits were what we could provide." More than 80 percent of CAU's employees are minority and many are single mothers.

Blanchard opted to self-insure the agency in 1990. He established a Voluntary Employee Benefits Association (VEBA - 501(c)(9)) in 1999, which currently is funded to $2 million. CAU has enjoyed below-average insurance costs increases for 20 years, he said.

In fact, the CAU model is so successful that plan administrator Meritain Health, the nation's largest independent provider of services for self-funded health plans, cites CAU as the poster-child for the economic benefits of self-insurance in marketing materials. Merrill Lynch, VEBA administrator for CAU, cites the agency's VEBA as a beta product nationally, according to Blanchard.