Co-Ops are No Substitute for a Public Option
Senator Kent Conrad (D-ND)
Ezra Klein’s interview with Senator Kent Conrad (D-ND) is probably the best source for information for Conrad’s thinking about health care co-ops as an alternative to for-profit private plans. I think the interview also makes clear that Conrad’s thinking about this is still a bit on the vague side. Part of the issue is that a lot of the thinking is clearly political thinking, thinking about how to come up with something that Republicans will vote for. As Ezra says and as Jonathan Cohn agrees, the merits of this proposal aside it’s just not a substitute for a robust public health insurance option.
To put it most crudely, the available evidence appears to overwhelmingly indicate that governments can provide health insurance of equal quality at lower cost to the private sector. It’s also true that a certain kind of ideological dogma says this can’t possibly be true. The view behind the public insurance option is that the dogma ought to be put to the test through competition. Proposals that aim to do something, nut that don’t aim to put the dogma to the test, are not a compromise. Indeed, the idea of a “public option” is itself a compromise between ideological dogma and the evidence in favor of single payer. The health co-ops seem like an interesting idea to me, but anything that drops the public plan is a proposal to drop the public plan not really a public plan “compromise.” That said, insofar as Congress is inclined to do this it ought to be done well.
Igor Volsky has some suggestions:
Mayo Clinic (Wikimedia)
1. To exert maximum purchasing power and achieve bargaining clout to compete with provider oligarchies (that are currently setting prices) Congress would have to establish a single national cooperative.
2. Congress should allocate federal start-up funds to quickly establish the cooperative.
3. The cooperative should follow all of the rules of the Exchange. It would have to guarantee coverage at community rates and would not be able to discriminate against individuals with pre-existing conditions, or impose lifetime or annual limits on benefits for any participant or beneficiary. The cooperative must commit an appropriate percentage of premiums towards medical benefits.
4. It should be transparent and accountable to its members and the public.
5. The cooperative should be required to provide the same minimum benefits as private insurers.
6. The cooperative could be required to implement delivery system and payment reforms and “replicate the accountable care organizations like the Mayo Clinic and Seattle’s Group Health that provide a proven model for delivering high quality, affordable care in a non-profit, group practice setting.”
It strikes me as a little weird that this idea seems to be flying into place so suddenly out of left field, but it seems to be gaining a lot of momentum over the past few days.
19 Responses to “Co-Ops are No Substitute for a Public Option”
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June 12th, 2009 at 3:29 pm
Since the advantage of bigness is that it gives you more power in negotiation, would it be a reasonable substitute to address this price discrimination in medical services directly?
For example, if a doctor provides a service to enrollees in Big Insurance Company X or Medicare at a certain cost, they would be required to charge no more than that to everyone who gets that service.
I never hear anyone suggest this, but it seems obvious, so does anyone know why this is a terrible idea?
June 12th, 2009 at 3:33 pm
It strikes me as a little weird that this idea seems to be flying into place so suddenly out of left field, but it seems to be gaining a lot of momentum over the past few days.
My sense is that it was becoming clear a public option was going to happen. So this is a last-ditch effort to, in Matt’s terms, come up with something like a public option that, if successful, wouldn’t contradict the “dogma” as much.
June 12th, 2009 at 3:34 pm
There is nothing new about the health care cooperatives idea. It has been floating around Congress for many different sessions. It is usually a state heath care cooperative and is focused on small businesses for the most part. They also have bills related to opening the Federal Employees Health Benefits Program to non-employees. It seems like they are going through all their old bills, and casting about for something, anything to please insurance companies.
June 12th, 2009 at 4:05 pm
The only acceptable Co-op is one that is large and will only pay 10% above medicare. No negotiation, No dealing, a take it or leave it offer. No need to pay anyone to make health care payment judgements The people incharge must also be treat like federal employees, have the same pay structure and benifits. Finally the board must be appointe by the White House or Congress.
June 12th, 2009 at 4:10 pm
It is intended to allow for killing off the “public option” (can’t you hear it? “After all, this is a public/private option!”) which, having accomplished the deed, will be allowed to die itself in a miasma of weedy details.
Put another way all this blah blah blah is to wear you down to the point that you’ll think a national mandate with some subsidies to business and individuals is a great achievement and allow ObaFuhrer to check health care reform off his to do list.
June 12th, 2009 at 4:12 pm
Hey, finally I see Group Health mentioned in this context. I know it’s smaller than Kaiser Perm, but it’s surprised me that it has gotten so little attention.
June 12th, 2009 at 4:23 pm
The public option seems very similar to the “safety net” hospitals that exist now. For example, a New York City Hospital will never charge you more than $3000 no matter what is wrong with you and no matter how much it costs to get you better. The public option could be provided by the existing system of city and county hospitals. If you want to go to the Mayo Clinic or Mass General you will need private insurace. But, if you want to go to Cook County or UCLA Medical Center you are free to do so.
Emergency care would of course be provided by the hospital closest to you.
June 12th, 2009 at 4:27 pm
I think the insurance companies would jump on Igor’s suggestion since it’s basically a set up that allows the gov’t to funnel money into the insurance company’s bank accounts. I’m never very optimistic that we’re going to get real health care reform but now, seeing how quickly it’s drawing oxygen, I’m terrified that this co-op idea be the way we go.
June 12th, 2009 at 4:50 pm
Did Ezra ask about Kent’s for-profit health care political funding? Conrad accepts donations from health care companies with no, as in zero facilities in North Dakota. Of course not.
How about why nonprofit co-ops will magically solve the affordability problem when they exist in many markets, Kaiser, BC/BS, Group Health? Nope.
Conrad-Baucus are slippery and co-ops are their greased pig. They promise little in change, but retain the for-profit health insurance franchise. It could even provide a back door via TPA contracts or a for-profit licensing a nonprofit name, aka WellPoint.
http://stateofthedivision.blogspot.com/2009/06/max-kents-cool-bait-switch-co-op.html
Robert Reich expressed his disgust:
http://www.laprogressive.com/2009/06/12/the-latest-public-option-bamboozle-and-how-to-recognize-the-real-thing/
June 12th, 2009 at 5:09 pm
What’s happening on the Hill with healthcare reform makes me realize just how pluralistic and corrupt our government really is.
June 12th, 2009 at 5:18 pm
Tessa, what have the last several decades been but a constant reminder of our debasement?
Face it, this is the last thing we do really well.
Yes we can!
And recall that it was ObaFuhrer who took universal coverage off the table way back during the primaries.
June 12th, 2009 at 6:17 pm
I hate to admit it, but I agree with JT.
Except for the ObaFuhrer part. Obama clearly does not have that kind of power. He is more like a ObaGauleiter.
June 12th, 2009 at 6:18 pm
Can the government specify a public plan and bid it out for operation? If I were a very large employer, I’d be self-insured and outsource administration of my plan only. If I were an enormous employer, I might be able to really specify the nitty gritty of my health plan and squeeze bidders on administrative costs. The government would be bigger than that. If you couple that with any willing insurer/any willing provider provisions, you might get a public/private plan and the ability to measure the cost/benefit of privatization.
Given the requirement to insure everyone, and limits on how much you can deny isn’t premium mis-pricing a risk to these coops. If I think the risk of cancer is 1/100 and it’s really 1/50, I can wind up in a big hole pretty quickly unless I have some big pockets. This is likely a risk in the public plan as well as underpricing undermines the private sector.
June 12th, 2009 at 6:37 pm
Conrad’s co-op idea is just your basic “Hey! Look over there!” attempt to muddy the waters and avoid the public option.
There’s no reason people can’t do co-ops right now if they want to. They don’t do it because it won’t work. Health care is not like buying organic foods in bulk or selling fuel and grain to farmers.
Having been a member of Group Health for about 35 years, I can assure you there is nothing magic about the place. They stay afloat financially by selling health insurance to employee group plans that are front-loaded with healthy young people. Individual members pay about what they would pay for any other insurance plan, and if they do it long enough they become ‘member-owners’ of an organization with a very questionable management. For example, Group Health currently owns an entire vacant hospital near Bellevue which they built but could never fill with patients. The ‘member-owners’ of this co-op have zero say in how it is actually run.
This whole co-op thing is a total sham and it’s kind of revealing how someone like Ezra Klein, who has read so much about health care, has been taken in to the extent he has been by this dog-and-pony show.
What we need is a robust public option and we need it now. Spending another decade of “Well, that didn’t work” will leave us in a pretty deep hole.
June 12th, 2009 at 6:42 pm
Yeah, JT, but Obama didn’t say shit about agreeing to a Co-Op plan…nor has any prominent politician on the Hill. Co-Ops are Cop-Outs as far as I’m concerned, designed to satisfy powerful lobbyist who contribute to the re-election campaigns of OUR elected politicians.
June 12th, 2009 at 7:46 pm
I’m a little confused. Was the public plan people want actually going to exist on public subsidies and be controlled by the Legislature? I certainly wasn’t hoping so. I expected the public plan would be an independent public institution that was self funded through premiums and managed without direct interference from the political process. I expect that they would be bound by the rules of all other insurers and, like other insurers, be able to negotiate with providers over payment rate/method. They would be particularly successful because they would not need to turn a profit and would have natural widespread name recognition and reliability that other non-profit plans cannot.
I don’t see what the difference is between this public plan I describe and the co-op Sen. Conrad describes, nor do I see why public plan supporters are so dismayed.
June 12th, 2009 at 8:53 pm
Re: There is nothing new about the health care cooperatives idea.
In fact wasn’t something like this at the core of the Clinton reform proposal? Except that everyone would get insurance through these cooperatives rather than just having them as an option.
Re: No need to pay anyone to make health care payment judgements.
?? There will always be a need to have claim processors handle claims. And yes, to reject some claims– because they are in error (medical billing errors are very common), because the provider is padding his bill, or even because there is good cause to suspect outright fraud.
Re: If I think the risk of cancer is 1/100 and it’s really 1/50, I can wind up in a big hole pretty quickly unless I have some big pockets.
Except that we have very good figures on the incidence of cancer and other costly diseases and any halfway competent number cruncher should be able to estimate the percent of a plan’s insured population (assuming that population is sufficiently large) that will develop such conditions within a reasonable margin of error. A massive disaster or an unforeseen epidemic are more risky in this regard. But health insurers are themselves insured, by reinsurers who reimburse them in the case of extraodinary, high dollar claims.
June 13th, 2009 at 7:30 pm
um, on what planet? Even Susan Collins is saying “no thanks, wingnuts” to this idea.
its going nowhere fast, and is a bunch of crap-ola on a stick.
June 17th, 2009 at 12:45 am
serial catowner is right about Seattle’s Group Health. I recently found myself in a position where I might have had to purchase my own individual insurance plan. Their limits and exclusions are just as onerous as the big guys; their annual prescription drug coverage is one of the lowest of all insurers in Washington. If this is the best co-op model one can find — one that copies everything the deplorable for-profit “insurers” do — then the co-op idea is truly bogus.
No one seems to argue about publicly funded roads and highways. Publicly funded schools aren’t going to disappear anytime soon. Everyone loves publicly funded fire departments. What’s the problem with publicly funded health care? Argh!