Conrad Proposes Co-ops To Replace Public Plan
Conrad Proposes Co-ops To Replace Public Plan
In a closed-door meeting yesterday with members of the Senate Finance Committee, Sen. Kent Conrad (D-ND) proposed replacing a public health care plan with a non-profit cooperative “that would have the same plans and would be subject to the same standards [as private plans].” “That would provide an alternative to for-profit insurance companies, so that there’s a different delivery model for competition,” Conrad explained.
The New York Times’ Robert Pear writes, “the public plan might take the form of an insurance cooperative, owned and operated for the benefit of its members — individuals and businesses with fewer than 10 employees. This proposal, floated as a compromise, seemed to intrigue Republicans who were familiar with cooperatives that market electric power, telephone service, milk, wheat and other commodities”:
“The strength of this proposal is that it accomplishes much of what those who want a public option are calling for — that is, something to compete with private for-profit insurance companies,” Mr. Conrad said. “On the other hand, it meets the objections of many Republicans and some Democrats as well. The co-op is not government-controlled.”
According to an outline of Conrad’s proposal, obtained by the Wonk Room, the “consumer health cooperatives (co-ops)” would operate “at the state level or regionally” to “provide a non-profit, non-government, consumer-driven coverage option in every state to deliver maximum value for consumers.” “The democratic nature of co-ops could encourage increased quality and appropriate utilization and could help foster care integration and other delivery system reforms,” the outline states:
- Co-ops would be required to be non-profit
- Co-ops would provide a coverage option for individuals and micro-businesses (< 10 employees)
- All exchange rules and state laws that apply to other plans also would apply to co-ops
- Strong governance standards would be required to ensure a strong consumer focus and democratic structure.
Generally, cooperatives allow small businesses and individuals to “realize the advantages that large employers enjoy because of their size and bargaining power.”
Small businesses and individuals could purchase health coverage collectively and “strike a better deal than they would by acting separately.” But as a Commonwealth brief points out, most co-ops have difficulty fulfilling their goal of offering small employers and individuals a choice in health plans and reducing costs. That’s because to attract a wide array of health plans and exert purchasing power (bargain on behalf of its members), co-ops must enroll large numbers of employers. But without the ability to “offer substantial choice among well-known health plans, it is difficult for co-ops to attract enrolless, who are drawn to co-ops in part because of their ability to offer such choice.” In other words, it’s the classic “chicken-or-egg” dilemma.
Presumably, Conrad’s co-ops would act more like health care plans and less like health insurance exchanges. Unlike the traditional co-op which strives to give its members a choice of plans, Conrad’s co-op might either self-insure or contract out to a third-party administrator. But state-based or regional co-op health plans would be unable to exert the purchasing power of a Medicare-like public option. Whereas a public health care plan could use Medicare’s leverage and Medicare-like prices to negotiate lower prices and — through the miracle of head-to-head competition with private plans — push insurance companies to negotiate more aggressively with providers and dramatically lower health care spending, a cooperative will likely lack the clout to demand lower prices.
11 Responses to “Conrad Proposes Co-ops To Replace Public Plan”
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It helps Kent Conrad deliver for his for-profit health care supporters.
http://stateofthedivision.blogspot.com/2009/04/key-senators-to-imprint-health-care.html
The government exists to provide important services the private sector can’t or won’t. For-profit insurers left 50 million people out of the loop.
Baucus and Conrad are tainted. They show their allegiance.
June 10th, 2009 at 4:34 pmCo-ops would be disadvantaged by start up costs, which includes capital reserves. If they’re hiring a TPA, that’s usually one of the for-profit insurers. What’s the likelihood of them getting good bids from their competition?
This isn’t close to equal footing. Kent Conrad is dirty….
June 10th, 2009 at 4:38 pmnot for profit, huh. That’s rich. kind of like a Bernie Madoff charity, I presume.
June 10th, 2009 at 4:43 pmThis is just a bait-and-switch. There’s a wide variety of co-ops, but they all run on the same principle- saving a little money on the costs of doing business that is commercially viable. Food co-ops, child care co-ops, the big grain and feed and fuel co-ops of the midwest- they all depend on the fact that they break even. That doesn’t happen in health care. In health care you almost never have the wonderful customer you collect premiums from but never have to provide with service.
Conrad is just blowing smoke. I’m caring less and less if there is a nominal Democratic majority, if it depends on people like Conrad.
June 10th, 2009 at 6:37 pmA privately run cooperative is in no way, shape, or form a public option. By definition a “privately” run entity is not “public”. It is not a public plan compromise it is a complete and total sellout to the Republicans. It is not a watered down form a public option. It bares no resembles to a public plan. It would lack all the benefits of a public plan and would do nothing to reduce cost.
The “co-ops” would be too small to benefit from economies of scale. The different “co-ops” would create hundreds of redundant positions, offices, and systems. They would lack the negotiation power of size to lower prices. Since they would not be the large, default public plan, they would be forced to waste millions on advertising. There would also be no guarantee that the “co-ops” would adopt the best practice recommendations from the government. Unlike a national public option, the co-ops would do almost nothing to lower cost for millions of Americans struggling with the high cost of health care premiums.
June 10th, 2009 at 7:10 pmBeware these health care coops, one of the reasons GM went down is the weight of the cost of their health care benefits. I am sure that they tried to negotiate down their health care premiums. If they could not be successful with their 100s of thousands of employees, why does anyone think that brand new coops shopping in the private market for insurance could do any better! Then the other option is that these coops would self insure but unless they have huge pools of enrollees then they will just go down like 100s of health insurance corporations have done already! With more competition from more coops, the administrative costs will go up for all providers so no savings there either! Beware!!!
June 11th, 2009 at 2:26 pm“All exchange rules and state laws that apply to other plans also would apply to co-ops.” That would not be good news for a medically uninsurable living in a state like Virginia that still refuses to offer a risk pool.
June 11th, 2009 at 4:47 pmIt’s time to vote these so-called Democrats out and replace them with true progressives. This is just a divide and conquer scheme. Single payer is the only real answer.
June 11th, 2009 at 5:20 pmThe criticisms provided are not correct.
- The large public option would require large start up costs, capital reserves, and government subsidies.
- A large competing public option would also have to spend money to inform the public and enroll members. If you really want to minimize these costs, have the public purchase all health care through a single regional purchasing organization (Health Exchange) that would list the providers of a standard
health care package; providers would be ranked by price, and the default provider would be the lowest priced provider.
- Establish a single large co-op within each large geographic region of the United States and the economy of scale would be large.
The advantage of the co-op system is that the co-op system, unlike the U.S. Congress, could be designed to serve the public alone, and be immune from the influence of the hospital, physician, pharmaceutical, and medical device industries.
June 12th, 2009 at 1:23 amThe idea of a co-op should be further investigated, however, I fear it may turn out like the assigned risk pools within the automobile insurance industry. If an applicant is turned down by insurance companies, generally due to poor driving record, he/she may get the state-required coverage from the assigned risk pool operated in most states. This means the individuals getting their coverage from the pools are the worst drivers on our roads, and therefore, their premiums are exceedingly high. If someone can’t get coverage due to the cost or pre-existing conditions, how can a co-op provide coverage at a reasonable cost? I fear it would be filled within those least able to pay for the coverage and/or have exorbitantly expensive health care requirements.
I think there are many other steps we, as a nation, must consider in order to bring these costs within more affordable levels.
June 16th, 2009 at 7:05 pmThis sounds quite a bit like the healthcare idea I have been promoting for years.
June 17th, 2009 at 4:45 pm