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Argument: Health insurance co-ops can scale to compete with private insurers

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Supporting quotations

David Greising. "Give health-care co-ops a chance to work -- some already do". Chicago Tribune. August 1, 2009: "larger co-ops can pack a powerful punch.

With no dividends to pay, they reinvest profits. They have a record of providing productive, innovative, cost-effective medicine on par with some of the industry's biggest players, according to an in-depth report on the health industry's best practices sponsored by the Commonwealth Fund.

The case of HealthPartners, based in Bloomington, Minn., disproves the argument that co-ops cannot achieve operational efficiencies of for-profit providers. Beginning in the late 1990s, the Commonwealth Fund reports, HealthPartners introduced a program that compensated doctors mainly based on productivity. Over four years ended in 2002, the co-op saw the doctors' productivity jump 38 percent and costs drop 20 percent.

In 2007 alone, HealthPartners paid out $27 million in incentives to caregivers who met certain productivity and patient satisfaction goals. While that may sound like a big cost, it's actually a measure of success at improving productivity while keeping patients happy.

Co-ops are not the only answer to the nation's health-care problems. Perhaps, in fact, there is no single answer. The "government option" -- government-backed insurance -- may be one good tool to bring health care to nearly 50 million uninsured Americans.

But co-ops deserve more-serious consideration as another potential option."


Max Baucus, Democrat from Montana and Chairman of the Senate Finance Committee: "I am inclined, and I think the committee is inclined, toward a co-op. It’s not going to be public, we won’t call it public, but it will be tough enough to keep insurance companies’ feet to the fire."[1]


"Has Kent Conrad Solved the Public Plan Problem? An Interview." Ezra Klein interview with Kent Conrad (SD-D) in the Washington Post. June 11, 2009: "[Ezra Klein] for supporters of a public plan, the key advantage is that the public plan is big. It can negotiate discounts with providers. In the form Sen. Rockefeller offered, it can even use Medicare payment rates. These co-ops don't seem like they'd have that size or weight. How would they compete with large private insurers? [Ken Conrade]: They might have that weight. One option is for a national cooperative. That would give it the heft and weight to compete. But you know, one of the interesting things when we talk to experts is that they say critical mass is probably around 500,000 members. Puget Sound is probably around 580,000 and they compete successfully against much larger entities. The experts tell us that there are probably advantages of size up to a point, but after that point, the law of diminishing returns sets in."


Elliot Wicks, a health economist with Health Management Associates in Washington, D.C.: "This is really an effort to make the private market work more efficiently and to change the rules of the private market so that insurance serves people's needs better. Insurers compete on the basis of price, and so if a health cooperative lowers its price, it will bring down the prices for everyone in the market."[2]

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