Those Mysterious Co-ops

As far as I can tell, co-ops currently resemble Scooby-Doo villains at the beginning of an episode: There are a number of potential options, but also a lot of uncertainty about what's really going on—and no one actually knows which of the available possibilities we'll end up with. The main feature seems to be that they're not government run, although, as previously noted, there's some reason to believe that co-ops might, for all practical purposes, act as public plans under a different name.

In general, most everyone I've read seems uncertain about the details, and less than enthusiastic about the virtues of co-ops as policy: Mark Thoma, in the course of drawing up a quick list of what's known and possible about co-ops, points out that it's not clear they'll lower costs. The L.A. Times spotlights a small co-op that some think might serve as a model, while the New York Times reports that an attempt to foster co-ops in Iowa during the early 1990's didn't work out too well. And according to Robert Laszewski, the history of co-op insurers in the U.S. goes back even further, to when Blue Cross plans were first established six decades ago. Laszewski also thinks the idea is monumentally stupid, arguing that new co-ops would find it nearly impossible to compete with established insurers. Tyler Cowen, meanwhile, wonders why mutual plans have not been more successful. 

The confusion and lack of clarity is one reason, I suspect, why support seems so tepid. Another reason is that, while some think co-ops a perfectly fine idea, they're not topping many peoples' wishlists. Co-ops, first and foremost, are about compromise, and the rosiest view, I think, is that they represent a second-best scenario for most reform supporters. Given the tentative and relatively passionless support they're receiving, I wonder: What will happen when the details do come out, and partisans on both sides start loudly airing their disagreements?

Cross-posted at The Daily Dish.

Yesterday, Ron Bailey wrote about how, under certain scenarios, co-ops might just be another form of public option. 

Comments

[MikeP]

Mark Thoma, in the course of drawing up a quick list of what's known and possible about co-ops, points out that it's not clear they'll lower costs.

It's blatantly obvious they won't lower costs!

Could that be why some are so opposed to the notion? Because it puts the lie to the claim that the public option will lower costs?

[Public Option]

And I would have gotten away with it too, if it hadn't been for you meddling teabaggers!

[alice bowie]

From what I understand, the co-op is mutually owned by the policy holders...like prudential use to be.

That would save AT LEAST 3%. This is the usual profit of a health insurance company.

But like any other pyramid scheme...there has to be more healthy people than sick people.

I really don't see why so many people are bitching about the PUBLIC PLAN. It is probably going to work similar to that of a co-op or a mutually-owned insurance company. The only thing that would affect the tax payers is initial cost of the program...which can be paid back to the treasury once funded by the premiums.

I just have a feeling that the PUBLIC PLAN might only have REJECTs from the PRIVATE PLANs as Members. Can you imagine an insurance company where the majority of the people are sick, are not insurable, and are poor? I think it would go Bankrupt pretty quick.

Nevertheless, the sick, poor, uninsurable people will end up on MEDICAID anyway...isn't that the PUBLIC PLAN?

[MikeP]

I really don't see why so many people are bitching about the PUBLIC PLAN.

The main reason to be against the public plan is that it is very, very likely to receive legislative and regulatory favoritism over private plans. The second reason is that the public plan's standards are very, very likely to be legislated and regulated as the standards of all plans -- in order that its cost-cutting measures don't make it appear wildly mediocre in comparison -- thus rendering private plans moot.

I just have a feeling that the PUBLIC PLAN might only have REJECTs from the PRIVATE PLANs as Members. Can you imagine an insurance company where the majority of the people are sick, are not insurable, and are poor?

Actually, yes, I can. I would call that insurance company the government safety net. And I would find it far better than any reform plan running through Congress today.

If 75% of the people in the country are happy with their health care, the way to fix perceived issues with those who have difficulties getting health care is to fix perceived issues with those who have difficulties getting health care and to please leave the rest of us the hell alone.

[MikeP]

That said, real reform would amount to:

1. Ending the tax bias that binds health insurance to one's employer.

2. Allowing interstate provision of insurance.

3. Phasing out Medicare by liquidating people's Medicare accounts into vouchers for private insurance and HSAs, and putting those who can't afford those measures into the safety net.

[Alice Bowie]

MikeP,

WHat Medicare accounts are u talking about? The Medicare fund?

OLD PEOPLE ARE UN-INSURABLE. You need medicare (or some PUBLIC PLAN) for these people. Do you have any idea what the premiumns would be for a 65 y.o. man with history of heart disease?

[Alice Bowie]

I agree with your other points...though

[Alice Bowie]

HSA and private insurance is for the HEALTHY and the insurable.

Once you've had a stroke, don't even bother putting money into an HSA...you're gonna be broke b-4 u know it.

[MikeP]

As a cohort, old people are the richest people in the country. It is obscene to take 3% of some 18-year-old's income to pay for their medical care.

As for the "accounts", I mean the implied purchase of future insurance that we all have made through Medicare. Perhaps those 55 and over can choose to go ahead and live through the end of Medicare, but those younger should get some recompense so they can buy their own old-age medical insurance on the market. As I noted, those who couldn't afford it or were otherwise uninsurable can be placed in the safety net.

Just as with Social Security, Medicare has foisted a great many sins on the nation to hide the impression that some old people might need to be on welfare.

[Alice Bowie]

As rich as they may be...they'll never be able to afford their own medical care.

[MikeP]

Well, I guess that settles it then.

[MikeP]

HSA and private insurance is for the HEALTHY and the insurable.

Sit back for a moment and realize that you have just described the great majority of Americans.

Now sit back for a moment and realize that government mandates for minimum insurance will most likely render this low cost alternative illegal.

[alice bowie]

They will probably not outlaw or run out-of-business private insurance.

If they have tough standards on who is eligible for this coverage...why not.

Since the great majority of Americans Don't require this coverage (since they have their own), it should make a difference to them. The government (us the taxpayer) will one way, or another, end up paying the bill for people that can't afford to pay...so why not collect a premium from them now.

[MikeP]

The government (us the taxpayer) will one way, or another, end up paying the bill for people that can't afford to pay...so why not collect a premium from them now.

Because... and I know I'm reaching here... because they can't afford it?

[brotherben]

Dang MikeP, my sarcasm detector is raisin' hell.

[Anonymous]

As rich as they may be...they'll never be able to afford their own medical care.

Then let them decide where to draw the line, not some panel of bureaucrats, which is the necessary form of government-run medicine. I wish there were a catchy name for this phenomenon to hammer the point home...

[Gilbert Martin]

"The main feature seems to be that they're not government run"

Yeah - just like Fannie Mae and Freddie Mac weren't (and aren't) "government run".

[Douglas Fletcher]

I don't like the sound of a health co-op.

I remember the food co-op at college & beyond, and some of those co-opteers had the look of people who didn't bathe as much as your average American.

I'd hate for modern medicine to turn into some kind of scratch n sniff affair.

[Invisible Finger]

Time to put Tyler Cowen in the Village Idiot category.

Insurance Companies, like S&L's, were originally mutual societies. Such organizations require sound money systems in order to operate. Insurance Companies were the first to realize that the end of Bretton Woods by Nixon would leave them with a lot of long-term investments paying lower rates of return than new investments and that they'd quickly become insolvent if they couldn't raise capital for a large volume of new investments. Hence de-mutualization. S&L's were caught in the same squeeze a few years later when the interest rates ballooned - hence the changes in banking law allowing S&L's to demutualize and get into other lines of business.

It all comes back to the Fed and Treasury.