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Why Co-Ops Suck

Every time Chuck Grassley has a brain fart, you lose. Senator Grassley and his republican cohorts don’t want the government to “pull the plug on grandma“, so there will be no “Death Panels“, or funding for living wills, in the senate bill. They absolutely hate organized labor, so there will be no employer mandate in the bill. The senator says “There’s two things that my caucus feel very strongly about. One is not to have a public option…“. We don’t want no “government takeover of the healthcare system“. So bingo, no public option. Instead, we’ll go with some half-baked cooperative notion proposed by Kent Conrad (D-N. Dakota).

We don’t know exactly what a co-op is, or how it will work, but it ain’t no “public option“, which is supported by democrats, and that’s good enough for the conservatives. Since the republicans think we are all Nazis, we’ll just cave in and give them whatever they want, whether it makes sense or not. According to Congressional Quarterly, “The [Senate] Finance Committee would set up consumer-owned “co-ops” that would essentially function as nonprofit insurers to compete against private health insurance companies. The proposal is seen as a compromise designed to attract moderate Democrats and Republicans“. It just so happens that the General Accounting Office did a study of health insurance purchasing cooperatives in 2000 in which they found that co-ops can do some good things to improve the quality of health care. The one thing they aren’t good at is “cooperatives’ potential to reduce overall premiums is limited because (1) they lack sufficient leverage as a result of their limited market share; (2) the cooperatives have not been able to produce administrative cost savings for insurers; or (3) their state laws and regulations already restrict to differing degrees the amount insurers can vary the premiums charged different groups purchasing the same health plan.

co-opOne of the best examples of a very large co-op is the Federal Employees Health Benefits (FEHB) program. This is the program that republicans like to tout since it insures members of congress. From 1985-2002, FEHB premiums grew only 0.1% less than the rest of the private insurance market. The entire purpose of a public option is to compete with private insurers to give them a benchmark on cost and quality. Senator John Rockefeller (D-W.Va.) asked “Are cooperatives going to be effective in taking on these gigantic insurance companies? The answer is a flat no.” Who gets hurt most by the state-run co-op idea? You guessed it, small-market states like Montana. A public option insurance plan would be available to everyone in every state, a much larger pool that could actually influence spiraling costs. Senator Sherrod Brown (D-Ohio) says “Cooperatives do not deliver the competition we need to keep prices in check and offer the kind of services people need.” All they would do is hand over 50 million new customers to existing for-profit companies with no way to stop them from denying or delaying needed care or increasing premiums.

Business Week claims that the battle is over and  “The Health Insurers Have Already Won” by redefining the debate in their own terms. Our own Senator, Max Baucus has always seen the public option as merely a talking point in the debate so, he really has no problem in giving it up without a fight. “Even former Federal Reserve chair Alan Greenspan had to acknowledge that unregulated markets don’t work. But apparently Max Baucus hasn’t figured that out.” President Obama, at his town hall in Belgrade made it clear that he will back whatever bill comes out of the Finance Committee, even if it’s a piece of crap and Max is only too happy to oblige. Senator Grassley likes Obama, but thinks he’s too inexperienced, after all “I believe he didn’t serve in government long enough to understand really how things work. If we are to do anything at all about the ever-increasing cost of health insurance, the plan must include a viable public option, not a vague cooperative insurance plan. Let Max and Obama know that we are paying attention. We want real reform. Co-ops will not fix what is broken in our health care system. Only a strong public option insurance plan will do that.

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One Response

  1. […] Blog and The Button Valley Bugle have been kicking blog butt on healthcare: here, here, here, and […]

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