Co-ops, Exchanges, Gateways, and The Need For A Public Plan

In 2000 the General Accounting Office did a study of health insurance purchasing cooperatives. This study should shed important light on the issue of insurance co-ops pushed by Senator Conrad and the problems of health insurance exchanges without a public option. The study found that:
Despite efforts to negotiate lower premiums, cooperatives have only been able to offer premiums that are comparable to those in the general small group market. The cooperatives we reviewed typically did not obtain overall premium reductions because (1) their market share provided insufficient leverage, (2) they could not produce administrative savings for insurers.
These purchasing co-ops may or may not be part of the co-op proposal promoted by Senator Conrad. (Note: Conrad has repeatedly refused to provide any concrete details for his co-ops idea.) The study makes it clear that collective purchasing co-ops will be useless at reducing premiums or controlling the spiraling cost.

The five purchasing co-ops that the GAO investigated work in a manner very similar to the state based health insurance exchanges that are likely to be a part of health care reform. Like the state based exchanges, they pool together health insurance purchases for small employers.

The California and the Florida co-ops at one time were both larger than many of the state based exchanges are projected to be. The CBO calculates that roughly 11% of the Americans will get health insurance from an exchange. The California co-op once had more members than that 11% that state exchanges are expected to enroll. While state based exchanges should give individuals and small businesses greater choice, they are unlikely to do anything to reduce premiums.

Another model of how new health insurance exchanges are likely to work is the Federal Employee Health Benefits Program. The FEHB is a health insurance exchange for federal employees. It does a great job of offering many choices but a terrible job at controlling cost. From 1985-2002 the premiums in the FEHB program grew only 0.1% slower than the rest of the private insurance market. The FEHB does not include a public option.

Finally, there is the example of Massachusetts. They implemented reform that would be similar to what Baucus is proposing. It also created a new health care exchange for small businesses (called the Commonwealth Connector) which did not include a public option. Massachusetts' reform did a good job at reducing the number of uninsured, but failed to control the spiraling cost of health insurance. Now Massachusetts is looking at some massive structural reforms to control cost.

There are only two “successful” health insurance companies which are co-ops, Group Health Cooperative in Washington and HealthPartner, Inc. in Minnesota. Conrad wants to replicate these instead of a public option. Even the National Cooperative Business Association admits that competition drove most of the health insurance co-ops out of business or forced them to abandon the co-op structure. While Group Health Cooperative provides a good quality of care, its premiums are still spiraling out of control.

Whether it is the Federal Employee Exchange, Commonwealth Connector, gateways, or state based purchasing co-ops; efforts to pool individuals and small businesses in a single health insurance marketplace does not help control cost. State based exchanges should help provide individuals and small business employees with greater choice. But without a public plan or massive structural changes, they will do basically nothing to arrest the devastating increase in cost of health insurance.

5 comments:

peter said...

Now Obama-Care is considering co-operative non-profit health care insurance programs. This in itself is a great move, but it does raise a few question that need answers.

Like is the Government going to fund these co-operative non-profits out of our taxes?

If they are funded through taxes, like those companies who asked for and took the tarp money they will be subject to how the money is spend and what health services will be paid for and who will be calling the shots?. Government unelected bureaucrats and political czars or patience’s and their doctors?

When or if these non-profits were to go bankrupt, would we the tax payers have to bail them out, like was done with Banks and Auto sector?

So is it really a move away from a socialized universal health care or just another way for the Government to come in with dismantling the current health care insurance programs through the back door with these Government and tax payer funded non-profit health care insurance programs?.

Anonymous said...

Peter, you are obviously a conservative nut case. While some of what you say is interesting, you appear to have been watching a little too much Fox News and what is with ObamaCare. None of the bills in Congress is even his. There are five of them. I think the public option is the best, most cheap option. The current system sucks and we have 47million uninsured to prove it along with exhorbitant premiums. Get your head out of your ass.

Anonymous said...

Peter, I forgot to mention that the TARP program was a Bush Administration program. Your cant about bureaucrats getting in between the patients and doctors is just ridiculous. Look to other health systems like France or Sweden where the life expectancy is longer.

Chairman and CEO said...

Anonymous, it seems you might be the person wiht a head stuck where the sun does not shine! Try and get your facts, if you have some, straight and not from ABC,CBS, NBC,CNN etc.

Any honest Senator, House Member, lawyer or lay person who has truly read the proposed health bill, can only reach one conclusion. Bill HR3200 is NOT a health care reform piece of legislation.

It is however, clearly a federal government power grab to control health benefits and treatments under private or public plans.

It further will take away responsibilities or restrictions concerning our health from the local State Governments, doctors and private insurance companies and put this power and decisions into the hands of an UN-elected health Commissioner (SEC. 123). Health care is not a constitutional right.

With more than 85% of Americans satisfied with the coverage available to them, why are Democrats and Republican Senators and House Members, supported by their respective political parties, lobbyists and special interest groups, rushing to Dismantle the existing health care insurance programs (SEC. 121)?

We are told about a need for competition. A single payer American socialized universal health care government plan does not and will not bring competition.

Is the so called reform, then, mainly to include health benefits for the 15 to 20 million illegal’s and non-Americans for political reasons? Is it to cover the 2 to 3 million who do not have and can not afford health care coverage? Let’s just put all Americans under the same plan our Senators and House Members currently have at our expense.

Why is there NO clause or statement in HR3200 or any proposed bill that specifically states, NON-AMERICAN CITIZENS will NOT be entitled to benefits under the Government socialized universal health care program. WHY?

As currently written, it is a power grab by the Federal Government and political parties too further control your life style, treatment and health benefits through unelected bureaucrats and czars making treatment or benefit decisions for us based on the cheapest available drug or health procedures? Like, Obama's one blue pill fits all approach (section 141)!

This Obama power grab for a socialized universal health care government run program, will lead to the complete dismantling of the current health care insurance system within 5 years. Read it, it is in the bill (SEC. 102).

Now Obama-Care is considering Government financed co-operative non-profit health care insurance programs. This in itself might be a good move, but it raises a number of questions that need to be answered.

Is the Government going to fund these co-operative non-profits out of our taxes?

Is there going to be a restriction that clearly states that only legalized American residents will be in a position to join and receive benefits from these Coops.?

If these Coops are funded through taxes, like those companies who asked for and took the tarp money, they will be subject to how the money is spend and what health services will be covered and who will be calling the shots relating to treatments? Will it be Government unelected bureaucrats and political czars or patience’s and their doctors? Read it (Subtitle E).

Further if and when these non-profits were to go bankrupt, would we the tax payers have to bail them out, like was done with Banks, GM, Chrysler and Fannie and Freddy? Of course we would, just ask Senators like Barney Franks or other that hide from the voters, until asking you for your vote.

So are these health care non-profit coops really a move away from a socialized universal health care or just another way for this Government to come in, through the back door, with dismantling the current health care insurance programs over a five year period.

Any taxpayer funding for these Coop, non-profit health care insurance programs means a socialized government plan.

The bill HR3200 is the largest Federal Government power grab from the people and their doctors and local State Governments in history of the Republic?

Brooks Lindsay said...

Debatepedia has a pro/con article on health insurance co-ops that is worth taking a look at:

http://wiki.idebate.org/index.php/Debate:_Health_insurance_cooperatives#Con

In general, I completely agree with the assessment that co-ops will not be able to control costs, primarily because they will not be able to scale quickly (or in the medium, or at all). Part of the reason they cannot scale very well is that there is no profit-incentive, so less rapid capital investment. The only alternative, therefore, is a public option, which can quickly get a national public insurance program up and running within a couple of years. This is the only serious way to control costs.

http://wiki.idebate.org/index.php/Welcome_to_Debatepedia!

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