Health insurance cooperative
Encyclopedia
A health insurance cooperative is a cooperative
entity that has the goal of providing health insurance
and is also owned by the people that the organization insures. It is a form of mutual insurance
.
and single-payer health care
.
It has been proposed as part of the health care reform debate in the United States
by the Barack Obama administration as a possible compromise with Blue Dog Democrats (as well as with Republicans
) in the search for universal health care
in the United States
.
As it is being proposed by President
Obama
and others, a future health insurance cooperative would not be government owned or run, but would instead receive an initial government investment and would then be operated as a non-profit organization
.
While a health insurance co-op is not strictly run by the government, hence not making it a public entity, it has been described by Senator Max Baucus
of Montana
, who is also the chairman of the United States Senate Committee on Finance
as "tough enough to keep insurance companies’ feet to the fire." He has proposed a bill that includes a health insurance cooperative instead of the public option.
There once were numerous rural health cooperatives established by the Farm Security Administration
(FSA). Most of them closed or merged over the years, generally because they lacked a sufficient economy of scale (i.e., they were too small to function efficiently). Thus, co-operatives currently have so little market share
as to be "invisible".
The bill proposed by Max Baucus
, the America’s Healthy Future Act
, which uses health insurance cooperatives, was estimated by the Congressional Budget Office
to cost $829 billion over ten years, and because of the increase in taxes of $210 billion over 10 years on premium insurance plans with high benefits, would lead to a reduction in the deficit of $81 billion. It would expand coverage to 94 percent of all eligible Americans.
of CNN
, he stated that "supporters know, here in Minnesota and other farm states think co-ops could solve at least a big chunk of the health care access and affordability problem." He interviewed Bill Oemichen, President of the Cooperative Network, who remarked that "where co-ops are, they tend to be very, very high quality because it is the consumer who owns them, that is making sure that their health care provider is a quality health care provider." Oemichen also stated that 65% of those who switched from typical health insurance reported better coverage and service.
In June 2009, Republican Senator Chuck Grassley
told reporters, "if it’s all done entirely within the private sector, you know, it doesn’t seem to me it’s got the faults that you have... by having the government institute something." Steven Hill, a program director at the New America Foundation
, has written for Salon.com
that "co-ops may hold the key to a substantive compromise", comparing the U.S. reform proposals with health care in Germany. He argued that they can produce quality care for less money given that they would lack the profit motive, they would negotiate fees for service, and that they would end current market monopolies that insurance companies have in several states.
and other Democrats have criticized abandoning the idea of a federally-run, statewide, public option in favor of co-ops, questioning whether the co-ops would have enough negotiating power to compete with private health insurers. The activist groups SEIU and MoveOn.org have also stated their opposition. Prominent economists such as 2008 Nobel Economics Laureate Paul Krugman
and Robert Reich
have also questioned co-ops ability to become large enough to reduce health care costs significantly. Thus, they both support the public option instead, which they state has strong opposition from the insurance industry.
Cooperative
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...
entity that has the goal of providing health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
and is also owned by the people that the organization insures. It is a form of mutual insurance
Mutual insurance
A mutual insurance company is an insurance company which has no shareholders but instead is owned entirely by its policyholders. The primary form of financial business set up as a mutual company in the United States has been mutual insurance. Under this idea, what would have been profits are...
.
United States
In the debate over healthcare reform, health care cooperatives are posited as an alternative to both publicly-funded health carePublicly-funded health care
Publicly funded health care is a form of health care financing designed to meet the cost of all or most health care needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are set down in rules applying to the whole population...
and single-payer health care
Single-payer health care
Single-payer health care is medical care funded from a single insurance pool, run by the state. Under a single-payer system, universal health care for an entire population can be financed from a pool to which many parties employees, employers, and the state have contributed...
.
It has been proposed as part of the health care reform debate in the United States
Health care reform debate in the United States
The health care reform debate in the United States has been a political issue for many years, focusing upon increasing coverage, decreasing the cost and social burden of healthcare, insurance reform, and the philosophy of its provision, funding, and government involvement...
by the Barack Obama administration as a possible compromise with Blue Dog Democrats (as well as with Republicans
Republican Party (United States)
The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...
) in the search for universal health care
Universal health care
Universal health care is a term referring to organized health care systems built around the principle of universal coverage for all members of society, combining mechanisms for health financing and service provision.-History:...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
As it is being proposed by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
and others, a future health insurance cooperative would not be government owned or run, but would instead receive an initial government investment and would then be operated as a non-profit organization
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
.
While a health insurance co-op is not strictly run by the government, hence not making it a public entity, it has been described by Senator Max Baucus
Max Baucus
Max Sieben Baucus is the senior United States Senator from Montana and a member of the Democratic Party. First elected to the Senate in 1978, as of 2010 he is the longest-serving Senator from Montana, and the fifth longest-serving U.S...
of Montana
Montana
Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...
, who is also the chairman of the United States Senate Committee on Finance
United States Senate Committee on Finance
The U.S. Senate Committee on Finance is a standing committee of the United States Senate. The Committee concerns itself with matters relating to taxation and other revenue measures generally, and those relating to the insular possessions; bonded debt of the United States; customs, collection...
as "tough enough to keep insurance companies’ feet to the fire." He has proposed a bill that includes a health insurance cooperative instead of the public option.
There once were numerous rural health cooperatives established by the Farm Security Administration
Farm Security Administration
Initially created as the Resettlement Administration in 1935 as part of the New Deal in the United States, the Farm Security Administration was an effort during the Depression to combat American rural poverty...
(FSA). Most of them closed or merged over the years, generally because they lacked a sufficient economy of scale (i.e., they were too small to function efficiently). Thus, co-operatives currently have so little market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
as to be "invisible".
The bill proposed by Max Baucus
Max Baucus
Max Sieben Baucus is the senior United States Senator from Montana and a member of the Democratic Party. First elected to the Senate in 1978, as of 2010 he is the longest-serving Senator from Montana, and the fifth longest-serving U.S...
, the America’s Healthy Future Act
America’s Healthy Future Act
The America’s Healthy Future Act is a proposed law by Democratic Senator Max Baucus of Montana, who chairs the Senate Finance Committee, on September 16, 2009. It is also colloquially known as the Baucus Health Bill, the Baucus Health Plan, or BaucusCare. Baucus initially publicly released a...
, which uses health insurance cooperatives, was estimated by the Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....
to cost $829 billion over ten years, and because of the increase in taxes of $210 billion over 10 years on premium insurance plans with high benefits, would lead to a reduction in the deficit of $81 billion. It would expand coverage to 94 percent of all eligible Americans.
Support
During a September 2009 report by John KingJohn King (journalist)
John King is an American journalist and is the anchor of John King, USA which appears weeknights at 7pm/ET on CNN. He is also the former anchor of State of the Union with John King...
of CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
, he stated that "supporters know, here in Minnesota and other farm states think co-ops could solve at least a big chunk of the health care access and affordability problem." He interviewed Bill Oemichen, President of the Cooperative Network, who remarked that "where co-ops are, they tend to be very, very high quality because it is the consumer who owns them, that is making sure that their health care provider is a quality health care provider." Oemichen also stated that 65% of those who switched from typical health insurance reported better coverage and service.
In June 2009, Republican Senator Chuck Grassley
Chuck Grassley
Charles Ernest "Chuck" Grassley is the senior United States Senator from Iowa . A member of Republican Party, he previously served in the served in the United States House of Representatives and the Iowa state legislature...
told reporters, "if it’s all done entirely within the private sector, you know, it doesn’t seem to me it’s got the faults that you have... by having the government institute something." Steven Hill, a program director at the New America Foundation
New America Foundation
The New America Foundation is a non-profit public policy institute and think tank with offices in Washington, D.C. and Sacramento, CA. It was founded in 1999 by Ted Halstead, Sherle Schwenninger, Michael Lind and Walter Russell Mead....
, has written for Salon.com
Salon.com
Salon.com, part of Salon Media Group , often just called Salon, is an online liberal magazine, with content updated each weekday. Salon was founded by David Talbot and launched on November 20, 1995. It was the internet's first online-only commercial publication. The magazine focuses on U.S...
that "co-ops may hold the key to a substantive compromise", comparing the U.S. reform proposals with health care in Germany. He argued that they can produce quality care for less money given that they would lack the profit motive, they would negotiate fees for service, and that they would end current market monopolies that insurance companies have in several states.
Criticism
Howard DeanHoward Dean
Howard Brush Dean III is an American politician and physician from Vermont. He served six terms as the 79th Governor of Vermont and ran unsuccessfully for the 2004 Democratic presidential nomination. He was chairman of the Democratic National Committee from 2005 to 2009. Although his U.S...
and other Democrats have criticized abandoning the idea of a federally-run, statewide, public option in favor of co-ops, questioning whether the co-ops would have enough negotiating power to compete with private health insurers. The activist groups SEIU and MoveOn.org have also stated their opposition. Prominent economists such as 2008 Nobel Economics Laureate Paul Krugman
Paul Krugman
Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...
and Robert Reich
Robert Reich
Robert Bernard Reich is an American political economist, professor, author, and political commentator. He served in the administrations of Presidents Gerald Ford and Jimmy Carter and was Secretary of Labor under President Bill Clinton from 1993 to 1997....
have also questioned co-ops ability to become large enough to reduce health care costs significantly. Thus, they both support the public option instead, which they state has strong opposition from the insurance industry.
Examples
- Group Health CooperativeGroup Health CooperativeGroup Health Cooperative, more commonly known as Group Health, is a Seattle, Washington based nonprofit healthcare organization. Established in 1947, it today provides coverage and care for about 700,000 people in Washington and Idaho and is one of the largest private employers in Washington...
- HealthPartnersHealthPartnersHealthPartners is an integrated, nonprofit heath care provider located in Bloomington, Minnesota, offering a number of different heath care plans. It is the largest consumer-governed, nonprofit health care organization in the United States. - History :...
- Patient Physician Cooperatives
- Everspring Health
External links
- Looking At Health Care Co-ops - Planet MoneyPlanet MoneyPlanet Money is an American podcast and blog produced by NPR. The podcast launched on September 6, 2008 to cover the global financial crisis of 2008–2009 in the wake of the Federal takeover of Fannie Mae and Freddie Mac. It was created after the success of "The Giant Pool of Money", an episode of...