Will The Health Care Crisis Cooperate With Health Insurance Co-Ops
Wednesday, July 01, 2009SUSIE GHARIB: The drive toward health care reform is intensifying as key lawmakers put the finishing touches on proposals they hope to vote on by the end of the month. Today the president stepped up his plea for reform at an emotional forum in Virginia. Obama told the crowd reform must happen this year and that waiting will be more costly than acting now. A central goal of his plan is making health insurance accessible to all Americans. And again today, he voiced his support for a government-run public option to compete with private insurers. He says a public plan will keep insurers honest. BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There should be a benchmark there of a public plan, a not-for-profit plan that keeps administrative costs low and is focused on providing good service. And that way you can make the decision which deal is going to be better for you and your family.
GHARIB: But many Republicans are opposed to a public plan, so moderate Democrats on Capitol Hill have been looking for alternatives that could gain bipartisan support. One idea is what's called a health insurance co-op. As Dana Bate explains, these co-ops could provide lower cost options without government control.
DANA BATE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Most people are familiar with the idea of an agricultural co-op. Small farms band together to maximize their market power allowing them to buy machinery and get crops to market more easily. Now lawmakers are talking about applying that same concept to health insurance. A non-profit group of insurers would be owned by local consumers or business people offering an array of plans for members. Gail Wilensky says in rural states that lack health insurance options, co-ops could offer reliable choices.
GAIL WILENSKY, CHIEF ECONOMIST, PROJECT HOPE: You could imagine a co- op being there to provide some assurance that there is a plan that will be owned by your fellow citizens that is more likely to provide benefits that you would want.
BATE: Lawmakers like Kent Conrad have suggested the government provide seed money to get the co-ops started. But health care analyst Joe Antos worries that would just create another Fannie Mae or Freddie Mac for health care.
JOSEPH ANTOS, HEALTH CARE ANALYST, AEI: It would be something that once Congress created it, it really wouldn't want to see fail. And it's this no failure, too big to fail phenomenon that I think is perhaps the biggest danger.
BATE: It's unclear how big these co-ops would be and where they would operate. If they are confined to rural areas, they would be much smaller than a public plan. That also means they would have less influence in the marketplace to negotiate prices.
WILENSKY: As long as it's not a government plan, then presumably it's not going to have the kind of power that the government, by virtue of what it is and what it represents, can have.
BATE: But health care expert Linda Blumberg says that misses the point. She says there has been so much consolidation among insurance companies and providers that we need to catalyze competition and only a public plan has the size to do that.
LINDA BLUMBERG, HEALTH ECONOMIST, URBAN INSTITUTE: Big is better in terms of leverage in the market, in terms of getting provider payments down and really looking for efficiencies and pushing insurers, the private insurers as well, to create efficiencies in their systems.
BATE: Many on the left agree, saying these entities would not achieve the goals of a public plan. And many on the right say co-ops would create a highly regulated bureaucracy. So like many Washington deals, health insurance co-ops may end up being the compromise that satisfies no one. Dana Bate, NIGHTLY BUSINESS REPORT, Washington.
