Health Insurance Purchasing Cooperative (HIPC)

What is a health insurance purchasing cooperative (HIPC)?

A health insurance purchasing cooperative (HIPC) is a collection of businesses and/or individuals that come together to purchase health insurance plans as a collective entity. HPICs are usually formed by a group of small businesses that wish to offer direct health insurance to their employees while remaining competitive with larger companies.

With so few employees, each small business would individually struggle to commend competitive rates from insurance companies. Together, these small businesses can bargain with health insurance companies as a collective, potentially allowing them to secure better rates and remain competitive.

A HIPC is not the same as a group purchasing organization.

Why are health insurance purchasing cooperatives important in healthcare?

In today’s healthcare ecosystem, workplace health insurance plans are generally less expensive than purchasing Individual or Family plans from the Marketplace on directly. As such, when choosing which companies to work at, many individuals will make decisions based at least partially on healthcare benefits, along with more traditional criteria like salary and working environment.

Especially in the 1990s and early 2000s, HIPCs were touted as a way for small businesses to offer attractive healthcare plans, which would allow them to appeal to potential employee talent. Although many HIPCs struggled to retain members, the concept set the stage for the development of healthcare we see today, where many small businesses offer high deductible health plans.