Are Member-Owned Cooperatives the Answer?

Whether member-owned cooperatives can create an affordable health insurance option to get more Americans covered depends on a variety of factors, some of which are unrelated to the characteristics of the cooperative:
• Whether the cooperatives are required to take in anyone who applies for coverage, regardless of medical history or status (this feature is called guaranteed issue);
• Whether lower-income insured participants are subsidized in some way to make insurance affordable;
• Whether the cooperatives can define a reasonable benefit package without a lot of political interference that adds expensive, marginally-beneficial coverage mandates; or
• Whether elected officials will allow the cooperative to operate as cost-efficiently as possible, or whether they will try to impose a variety of policies on them unrelated to their core mission, such as the requirement that the cooperatives pay "prevailing wages" or requirements that they get work done via preferred providers of services who are major supporters of particular elected officials.

The other issue specifically relevant to the cooperatives is whether they can attract a broad risk pool, including not only the older, uninsured Americans or low-income uninsured, but also the healthy, young insured. Unless healthy people are part of the insurance pool to subsidize the unhealthy, it will not work. To attract the healthy, young insured, there must be an individual mandate, that is, a requirement that every adult American purchase health insurance. Without a broad individual mandate, the cooperative is unlikely to have an economically-viable broad insurance pool.
I would hope that this cooperative gives well incentives to its members and rewards high-quality care through its payment systems. If it does, it could make a major contribution not only to broadening insurance coverage, but improving the quality of care.

By Michael Critelli  |  August 17, 2009; 4:21 PM ET  | Category:  Cooperatives , Health Care Reform , Health costs , Individual mandate , Insurance , Public option
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