Senate Finance Committee healthcare co-op vs what's required for a strong, nation or regional co-op

[flpoljunkie]

The Senate Finance Committee isn’t likely to include a new government insurance program, lawmakers say. Instead, they’re looking at setting up health-insurance cooperatives.

The nonprofit health-care cooperatives would cover 12 million people and receive $6 billion in federal startup funds, Senator Kent Conrad said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ai3EBhLYkVaQ

But all health insurance exchanges are not created equal. Just as there's a weak and strong version of the public plan, there's a weak and strong version of the exchange.

The strong version is national, or at least regional. It's open to everyone: The unemployed, the self-employed and any business, no matter the size, that wants to buy in. There's risk adjustment to reduce the incentive for cherry-picking. The huge pool of users gives the exchange tremendous advantages in scale, simplicity and standardization (experts say that you need at least 20 million to fully achieve these benefits -- easy in a national exchange but harder in a regional or state-based one). With so many potential customers, insurers are eager to participate, and they will bid aggressively to ensure they're included in the market and compete aggressively to make sure they're successful within it. Over time, the combination of increased efficiencies and greater competition drive down costs, which will lead more employers to use the exchange, which will in turn give it more scale and bargaining power. You could easily see this exchange slowly emerge as the de facto American health-care system. And not through government fiat. Through consumer choice.

The weak version is state-based. It's open to only the unemployed, the self-employed and small businesses. Risk adjustment, if it exists at all, is crude. With such a limited pool of applicants, insurers aren't driven to compete, and the efficiencies of scale and competition are minimal. It never really grows, and instead exists as a marginal policy to mop up those who aren't covered by employers. Sort of an outlet shopping model for health-care, accessible only to the few able to get there.

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/28/AR2009072802114.html?hpid=opinionsbox1

[backscatter712]

1. Didn't Conrad already say he wanted state-based co-ops?

In other words, he wanted a system where the bargaining power was broken up into pieces too small to have any sort of effects on the market.

[flpoljunkie]

2. I believe Conrad has been an enthusiastic proponent of co-ops from the start.

And, he is, of course, one of the six members of the 'Coalition of the Willing' as Baucus calls this select group which meets in secret and is making the decisions for the entire Senate Finance Committee.

The members of this group come from states which collectively represent only 2.74% of the population of the United States.

[Laelth]

3. Remember when various states deregulated electricity and opened it up to competition?

Remember when they did the same for phone companies? Did your power bill go down? Did your phone bill go down?

The companies that participate in the exchange will not compete seriously. They will not sacrifice profits in the name of "free market competition." They will merely ramp up their advertising (blowing more money on overhead that could be used for real health care).

These co-ops (both the weak and the strong) will not help at all.

:dem:

-Laelth

[Teaser]

4. note: exchanges != coops

the exchanges are markets on which you could buy into a coop, a public plan, or any private plan.

[flpoljunkie]

5. Yes, a co-op would be offered in a HIE--whether it or the co-op is weak or strong.