01 March 2011

Health Insurers: Co-ops Too Awesome For Colorado

Usually, the argument for having the private for profit sector of the economy do something is that it lowers costs and is more efficient.

But, that isn't the argument that opponents of a plan to established a health care cooperative (i.e. a patient owned health insurance company) have made to Colorado's General Assembly in response to Senate Bill 168 which calls for establishing a commission to present the co-op proposal to voters in 2013.

According the today's Denver Daily News, "State Senator Shawn Mitchell, R-Broomfield, acknowledged that the plan itself does not create single-payer system in Colorado," but, he believes that it is likely that a co-op would expand and drive private carriers out of the market, becoming a single-payer or predominant payer in the state.

In other words, Mitchell believes that a co-op would provide a better deal to Colorado health care consumers that they would choose over the status quo of private health insurance companies.

Mark Reese, a spokesman for the Colorado Association of Health Plans, said as many of 20,000 people employed by the private health care insurance industry in Colorado would lose their jobs as a result of a universal cooperative.


Translation: Health insurance companies are so wildly inefficient that a health insurance cooperative could do the same job with 20,000 fewer people.

As Senator Mitchell notes, this would not be a single payer health care plan like they have in Canada:

Senate Bill 168 would create a board of health care and policy experts [funded with $1.2 million of private donations] to develop details for implementing a health care cooperative that would include all Coloradoans as members. . . .

Coloradoans would be allowed to kept their primary insurance provide and instead use the cooperative as a supplemental policy.

Coloradoans would also be allowed to choose medical provider that is not part of the system. In those cases, patients would be required to pay the gap between the cooperative's reimbursement and the provider's charges.


The status quo indicates that there is considerable truth to the argument of cooperative opponents that government can manage health insurance claims with fewer employees than health insurance companies do. The Medicaid program in Colorado, for example, processes all of its claims in the state for its 553,800 beneficiaries with fewer than 900 employees.

Co-operatives are alternatives to anti-trust regulation and government owned enterprises that rely on the say members have in how the co-operative is run to keep them working in the member's best interests.

If a health care co-operative will, as opponents claim, provide health care at a lower cost than health insurance companies do, by providing health care with 20,000 fewer health insurance company employees whose wasteful paperwork is driving up the cost of health care in Colorado, then I am all for it.

The last time I checked, the objective of Republicans and Democrats alike was to reduce health care costs and cut waste in the health insurance industry without making unnecessary cuts in the health care that was provided. Indeed, the Republican critics of health care reform in Congress specifically made a point of criticising health care reform's failure to include enough of a focus on cost savings.

One doesn't have to be a died in wool ideological supporter of co-operatives for co-operatives sake to say that co-operatives are a good option when consumers choose them the buy services also offered by investor owned corporations in circumstances where co-operatives provide lower prices through more efficient operations.

It isn't as if Republicans in Colorado as a whole have some deep ideological opposition to co-operatives as a form of business organization in any case. In rural Colorado, co-operatives are the primary way people get electricity, receive their telephone service, buy their farm supplies, store their grain, sell their crops, and buy their water. In Denver, Republicans make up a disproportionate share of people who send their children to pre-school through co-operatives, and many people in Colorado already get life insurance, disability insurance and casualty insurance from mutual insurance companies (which is just another name for a consumer's co-operative) like Northwestern Mutual or Amica. A citizen owned football team won the Superbowl this year. Almost every law firm, accounting firm and medical practice in the state is organized as an employee owned enterprise.

None of this changes how health care providers are organized. From their perspective, a health care co-operative is just one more health insurance company to deal with in the billing process - a big one, according to opponents, but not an organization that is actually providing medical services directly to patients.

1 comment:

Ivan said...

Good article. It is notable that studies of comparable programs suggest that the Cooperative could save money, create a net gain in employment between 25,000 and 85,000, and decrease employer expenses on health care as much as 40%. The opponents of SB 168 do not want to the legislature or public to see the consultant's report that would be prepared if the bill passed. Proponents want to the bill passed so that they can see the consultant's report. More information is available at www.Aguilarfor32.com and http://www.healthcareforallcolorado.org/?p=83 .
Ivan J. Miller, Ph.D.
Health Policy Advisor
Office of Senator Irene Aguilar, M.D.