Just Because You Build it Does Not Mean They Will Come

I'm all for generating new ideas to reform the health-care system. The problem is that as often happens in Washington, people get tired of one idea and then move on to another. The danger is that nothing gets done in the end. I am concerned that we are now seeing this with the co-ops as an alternative to the public option.

Simply put, the co-op allows members of the public to come together and create a company to provide a type of service. Co-ops are much more popular in other industries than in health care. Like anything that involves the public, there are supporters and detractors. Ask a friend who lives in New York City, and you are bound to get an earful from one of them if they're housing situation is part of a co-op!

I've noticed that when people talk about co-ops, they often mention Group Health, a successful co-op in Seattle. However, that is the exception, and it took decades to be successful. And more importantly, being a co-op has not prevented it from raising premiums due to escalating costs of providing health care. At the end of the day, it's still essentially an insurance company with all the challenges of assessing risk. Just because a co-op is a non-profit doesn't mean it serves the public better as it relates to health care. If you're surprised by this statement, look at non-profit hospitals, and you will be shocked by how many of them provide little charity care.

Why don't we have more co-ops today? There has been very little regulation to prevent co-ops from existing already. And we should look at why that is the case. It is very challenging to get them to work effectively. Granted, some of these difficulties are because of the competition in the insurance space. However, just because you create a co-op in your area does not mean that people will come to it. Many consumers will stay with their current insurer unless the co-op can create more benefits for less cost. That is a tall order in today's environment, especially since the overall goal of health-care reform is to control costs, and co-ops have not controlled costs in recent years.

So let's go ahead and discuss the co-op. But let's not forget about the public plan either.

By John J. Whyte  |  August 18, 2009; 5:48 PM ET  | Category:  Cooperatives , Health Care Reform , Health costs Save & Share:                 
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