Health Care

What Is the Health Care Co-Op?

by Tim Foley

categories: Obama And Congress, Public Plan

Published August 18, 2009 @ 06:46PM PT

Due in equal measure to Sen. Kent Conrad making the rounds (and some provocative statements) on a Sunday talk show pitching his idea of a co-op, and the White House’s confusing signal on whether they support a public health insurance option to compete with private insurers or not, the co-op is back in the news. But what is it? Sen. Conrad, who came up with the idea apparently in an afternoon with his staff (I’m not actually joking) describes it this way: “The co-op plan aims to achieve the same benefits for consumers as a public option without government control of health insurance.” I prefer my description: “it serves no particularly impressive purpose, it raises my blood pressure automatically whenever I see or hear a reference to it, and yet it’s oddly popular to the extent that I can’t seem to turn my TV on without seeing it.”

Why are we talking about this?

Conrad claims to have come up with the idea in face of Republican resistance to the public option – specifically the Republican members of the Senate Finance Committee, on which Sen. Conrad sits. Fine, Conrad said, if Sen. Grassley et al. won’t vote for a public option to compete with private insurers, let’s use a model familiar to many Midwesterners: a consumer owned and operated co-op. Clearly this is a political solution—when asked why he advocates one, Conrad doesn’t argue it’s merits. Instead he says, “This really isn't, to me, a matter of right or wrong. This is a matter of: Where are the votes in the United States Senate?”

We’re guessing at the details, since they haven’t been divulged. How it would work? Does the government give seed money in the form of grants to set these up? Does it give loans? Who, pray tell, does it give this seed money to? How long would it take to get one of these co-ops up and running? How long would it take them to get a network of doctors? Since the co-op would start with no customers and presumably no bargaining power, how long would it take for insurance companies to be quaking in their boots?

That said, we do know a lot about them:

• We know that we used to have health care co-ops in this country. What happened to most of them? As Professor Timothy Stoltzfus Jost explains, “The Farm Security Administration withdrew support in 1947, and they collapsed. They had a hard time getting going anyway.”
• We know the ones that have been relatively successful have had their own network of providers, like Kaiser or the VA. However, the best of them took decades to develop – up to 60 years.
• The GAO looked at health insurance co-ops in 2000. These weren’t the same idea – they would allow small businesses to pool their employees in a co-op to shop for insurance. The GAO’s conclusion? They don’t work very well and did nothing to lower costs.
• The fact that a health co-op is a non-profit won’t in and of itself yield competition. As I pointed out earlier, “Conrad’s home state of North Dakota has 475,000 people enrolled in the not-for-profit North Dakota Blue Cross Blue Shield. That’s not just competition – it’s a monopoly, 60% of the market. Guess what? It hasn’t helped. Premiums jumped 74% in the past seven years.”
• Most co-ops won’t be as successful as already-existing Blue Cross plans, which means they won’t have market clout to lower costs or change the game for private insurance. Which is, you know, the whole point.
• Conrad introduced the co-op in June to solve a political problem – find common ground to allow the Senate Finance Committee to release their bill. So far, the Finance Committee remains at impasse, we’ve seen no bill, and every other committee has been done for weeks now. Great job.
• By the way, Republicans aren’t biting. They say the co-op is a public option in sheep’s clothing. So they’re against it.
• And, of course, progressives are furious at even the hint that there won’t be a public option, so they’re against it, too.

I guess Conrad succeeded in uniting the left and the right. Unfortunately, they seem to be united against his idea – the same idea whose sole existence is not to make American health care better but to win votes.

(Photo credit:  kylelocket on Flickr.)