Why healthcare co-ops are a political solution, not an economic one
Here is a devastating critique of the idea of healthcare co-ops in place of a true public option (via Tim Foley at Change.org):
Weâ€™re guessing at the details, since they havenâ€™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, â€śThe Farm Security Administration withdrew support in 1947, and they collapsed. They had a hard time getting going anyway.â€ť
- 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 â€“ up to 60 years.
- The GAO looked at health insurance co-ops in 2000. These werenâ€™t the same idea â€“ they would allow small businesses to pool their employees in a co-op to shop for insurance. The GAOâ€™s conclusion? They donâ€™t work very well and did nothing to lower costs.
- The fact that a health co-op is a non-profit wonâ€™t in and of itself yield competition. As I pointed out earlier, â€śConradâ€™s home state of North Dakota has 475,000 people enrolled in the not-for-profit North Dakota Blue Cross Blue Shield. Thatâ€™s not just competition â€“ itâ€™s a monopoly, 60% of the market. Guess what? It hasnâ€™t helped. Premiums jumped 74% in the past seven years.â€ť
- Most co-ops wonâ€™t be as successful as already-existing Blue Cross plans, which means they wonâ€™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 â€“ find common ground to allow the Senate Finance Committee to release their bill. So far, the Finance Committee remains at impasse, weâ€™ve seen no bill, and every other committee has been done for weeks now. Great job.
- By the way, Republicans arenâ€™t biting. They say the co-op is a public option in sheepâ€™s clothing. So theyâ€™re against it.
- And, of course, progressives are furious at even the hint that there wonâ€™t be a public option, so theyâ€™re against it, too.
I guess Conrad succeeded in uniting the left and the right. Unfortunately, they seem to be united against his idea â€“ the same idea whose sole existence is not to make American health care better but to win votes.