DES MOINES, Iowa -- Cliff Gold jokes that he sometimes feels likeMichael Corleone, the reluctant mobster from the Godfather movies.

"Justwhen I thought I was out, they pull me back in," Corleone famouslycomplained after a failed attempt to escape the mafia life.

Thedon's workdays included ordering hits against rivals. Gold's career hasbeen a bit less dramatic. He spent 30 years designing and marketinghealth insurance plans. He retired in 2008 from Wellmark Blue Cross& Blue Shield, the Des Moines-based giant where he'd been a topexecutive. He was relaxing in San Diego, where he planned to live parttime, when his friend David Lyons called from Iowa in 2010 with aproposition he couldn't refuse.

Congress had just passed asweeping health reform law. An obscure part of it aimed to encourage anew kind of health insurance organization, under which consumers wouldjoin together to form their own carriers. The idea would be similar tothe co-ops that rural residents formed to deliver electricity andfarmers formed to buy supplies and market crops.

Lyons, a formerstate insurance commissioner, thought Iowa could be a perfect spot forsuch an effort. Wellmark controls 86% of the state's market forinsurance sold to individuals and 64% of policies sold to smallemployers. No other carrier has more than a few percentage points.

Lyonspredicted Iowans would be hungry for a new option, and he asked hisfriend to join him in offering one. Gold was hesitant at first, but hebelieved Lyons was onto something. Within a few months, he was back inDes Moines, helping his old colleague write a proposal.

Thecompany, initially called Midwest Members Health, announced last winterthat federal officials had agreed to lend it up to $113 million to getstarted. The organizers hope they won't have to tap most of the federalloans, because premiums should be enough to cover members' health carecosts. The loan offer is there to assure consumers, state regulators andmedical providers that the company has enough assets to stay inbusiness for the long haul.

The organizers were relieved when theSupreme Court ruled this summer that President Barack Obama's overallhealth reform law was constitutional. And they were glad to see votersre-elect the president, who has promised to see the law fullyimplemented. Another result in either case could have crimped theproject.

"It would have affected our business plan, but notnecessarily our existence," said Gold, 59, who is the company's chiefoperating officer.

Food court of insurance options

Thecompany, now called CoOportunity, plans to market policies to Iowansand Nebraskans mainly through new health insurance exchanges. Theexchanges, scheduled to open next fall, are to be computerized systemsthat help consumers and employers compare and purchase policies fromcompeting vendors.

Gold said the format should help smallorganizations compete with big companies. He likens the situation to thefood court at a mall, where various restaurants compete for shoppers'attention.

"Everybody is presented equally," he said. "They havethe same amount of space, the signs have to be the same size, andeverybody eats in the same place."

One of Wellmark's mainadvantages is that it has set up an extensive network of hospitals,clinics and doctors that have agreed to treat the insurer's members forrelatively low, negotiated prices. The new co-op has bought the rightsto use a network organized by an Omaha firm, Midlands Choice, which hassigned up all of Iowa's hospitals and more than 90% of the state'sdoctors. An established Minnesota company has agreed to handle billingand customer service functions.

Small staff takes on insurance giant

CoOportunityhas 17 employees working in modest office space in Des Moines. Itsleaders plan to add about 23 more within two years, while farming outmost chores to its partner companies. Lyons, the new firm's chiefexecutive officer, said the small administrative costs should help keeppremiums low.

The company's goal is to attract 50,000 members in Iowa and Nebraska within five years.

"Lotsof people say we'll probably blow the lid off that, but it's a numberwe're comfortable with," Lyons said. He says the company is prepared toexpand quickly if more consumers choose its policies.

Bycomparison, Wellmark has more than 2 million members in Iowa and SouthDakota. Lyons said he'd be satisfied if the co-ops' main effect is tokeep bigger companies honest by offering consumers a ready alternative.

Iowa may have niche for co-op

Federalregulators have approved 23 new insurance co-ops. Many are in ruralstates, such as Iowa and Nebraska, but others are in more urban states,such as New York and Massachusetts.

"Part of it depends on whether or not there were crazy people like us around to put one together," Gold joked.

TimothyJost, a law professor at Washington & Lee University in Virginia,said the government started numerous health care co-ops in the 1930s.Those organizations flourished for a while, but most of them foldedafter the government pulled back and many doctors expressed hostility. Acouple of them are now in existence, including a successful one inWisconsin, said Jost, who specializes in health care law.

Jostsaid it's hard to predict how well the new co-ops will fare, but heexpects states with highly concentrated markets like Iowa's could have amore obvious niche to fill.

Jost said many companies have shiedfrom entering the individual insurance market because of fears theywould wind up attracting mainly people with serious health problems,which could quickly drive them into insolvency.

"What you reallyworry about when you're offering policies in the individual market isnot people with colds or the flu," Jost said. "It's people who needheart transplants or chemotherapy."

The health reform law helpsdeal with that problem by forming a pool that will force insurers withlow-cost members to subsidize those with high-cost members.

Co-ops need insurance executives

BarbaraYondorf, a health policy expert from Colorado, said although the co-opsare supposed to be overseen by consumer-run boards, it's crucial thatthey have experienced insurance experts running the day-to-dayoperations.

Yondorf was co-chairwoman of a national advisorycommittee when the new co-op system was designed. She sees a strongniche for co-ops that provide personal customer service and demonstratethat they have strong ties to the community.

"A big model for themshould be credit unions," she said. "Credit unions are competingagainst huge banks, but they're really expanding very quickly."

Shesays the co-op model should be assisted by the fact that under thehealth reform law, consumers who switch to a new insurer will be able toswitch back a year later if they're unsatisfied.

Before thatrule takes effect in 2014, consumers would have to worry that if theyleave their current insurer, the company could decline to take them backor could charge them higher rates because of a pre-existing healthissue.