Part 2: The "Why" Behind the Walls: Navigating the Insurance Maze

When I began the three-year research project for the Nonprofit Association of Oregon (NAO), the goal seemed straightforward: find a way to give nonprofits the same "buying power" for health insurance as a Fortune 500 company (See Part 1).

The research was promising. But as we moved from research into a feasibility study with 18 NAO nonprofit member organizations, we hit a wall. We discovered the very things that make the nonprofit sector special, like our people and our missions, were the same things making us "risky" in the eyes of the insurance industry.

The Demographic Reality

The nonprofit workforce is demographically distinct. According to the 2025 ECOnorthwest report, we employ significantly more women than the for-profit sector (roughly two-thirds of our workforce), and we employ a higher proportion of older workers than the private sector.

In the world of insurance "large group" ratings, this is often a red flag. Women of reproductive age and older populations naturally have higher insurance claims. Because of this, insurance carriers often view the sector through a lens of risk rather than impact.

Why "The Market" Isn't Bidding for You

One of the most frustrating moments of this project was exploring Association Plans. With over 1,600 members representing 30,000 employees, the case for a carrier to partner with NAO seemed obvious.

Yet, carrier after carrier declined partnering with us for an association plan. One phrase we heard repeatedly was: "Why would the carrier bid against itself?" In Oregon, carriers can charge small nonprofits higher market rates individually. If they grouped us together under one discounted association plan, they would lose profit. Despite state rules revised in 2022 to allow these plans, the power still sits with the carriers, and carriers weren't interested in lowering our costs.

The Failed Pilot

When we issued a Request for Information (RFI) to several national Professional Employer Organizations (PEOs), we expected competitive quotes for our pilot group. Instead, we were met with:

• Declined Quotes: Many PEOs simply refused to quote certain nonprofits because they didn't fit their "risk pool."

• Higher Rates: For those they did quote, the rates were often higher than what the small nonprofits were already paying.

The pilot's failure was a wake-up call. Traditional PEOs didn't understand nonprofits, and they weren't designed to serve us. They were "cherry-picking" clients, leaving the heart of our community infrastructure out in the cold.

In my final post, I’ll share how we finally broke through these barriers, found a partner willing to see past the "risk," and launched a solution that is already changing the game for Oregon nonprofits.

The North Starr Takeaway: Data doesn't lie, but it also doesn't tell the whole story. As a sector, we are penalized for our demographics because the insurance market is built for profit, not the public good. To fix this, we can't just ask to join existing systems; we have to find partners willing to build new ones alongside us. Do you currently have the right partners?

This is just a brief summary of a much longer white paper by North Starr Consulting, published by the Nonprofit Association of Oregon. To read the full white paper, visit NAO’s website.