Health Insurance Cooperatives Are Another Alternative
Of all the options on the table regarding health care reform, one we have not heard much about is health insurance cooperatives. Back in June, Sen. Kent Conrad (D-ND) raised the proposal of a nonprofit health insurance cooperative to replace a public health care plan.
According to a quote on The Wonk Room website, Conrad said that a health insurance cooperative “would have the same plans and would be subject to the same standards” as private insurance plans, and that a cooperative “would provide an alternative to for-profit insurance companies.”
A “cooperative,” as defined by the International Co-operative Alliance, is an autonomous group of people who come together voluntarily to meet their mutual economic, social, and cultural needs by forming a jointly-owned and democratically controlled entity. A health insurance cooperative, then, could be owned and operated by individuals and small businesses, and, as a co-op, would not be under government control.
The health insurance cooperative is not a new idea: many have been formed by employers in different states who have a common interest, such as groups of writers, farmers, and small business owners. Credit unions are a form of cooperative banking, agricultural co-ops are widespread, especially in rural areas, and utility cooperatives provide much of the electrical and telephone service in the country.
The pros of health insurance cooperatives is that they because they are run by and represent a large number of members, they have better bargaining power with insurance providers. This helps keep costs lower than having private insurance. The nonprofit status also is a cost saver.
One disadvantage of health insurance cooperatives is that as it stands now, co-ops in many states are not required to adhere to the same guidelines that private insurance companies must. Cooperatives that run into financial problems may not be able to meet the health care needs of its members.
According to Sen. Conrad’s proposal, health insurance cooperatives would be nonprofit, function at the state or regional level, and be a health coverage option for individuals and businesses that employ less than 10 people. Many other details would need to be ironed out.
Back in June, Sen. Charles Schumer, D-NY, was quoted in The Examiner as saying that the proposed health insurance cooperative was “a work in early progress.” At about that time, Democrats and Republicans were reportedly at odds over how much government involvement should be allowed in health insurance cooperatives. As the summer wears on and our lawmakers eventually return to Washington, it will be interesting to see how far this idea progresses.
International Co-operative Alliance
The Wonk Room, 6/10/09