With government-run health care/the public option/Obamacare causing so much political commotion, some in Congress are suggesting that health insurance cooperatives may be the way to go. But what are they, and how have they worked in the past? From the Washington Post, Cooperatives’ Record Weighed in Health-Care Debate
Sen. Kent Conrad (D-N.D.), a pivotal lawmaker in the health-care debate, wants to deliver coverage to the uninsured by starting up new cooperatives modeled on rural electric cooperatives that were founded during the Great Depression.
But rural electric cooperatives have a mixed track record, experts say. They brought electricity to millions of rural Americans who lacked it in the 1930s and today serve about 14 percent of Americans. But after 75 years, the rural electric cooperatives still rely heavily on federal credit subsidies, have weak balance sheets and, some studies suggest, operate less efficiently than privately-owned utilities.
…”A co-op by definition has several major advantages over private tax-paying corporations,” said Ken Glozer, a former Office of Management and Budget official and president of a consulting firm called OMB Professionals. “They don’t pay taxes, they borrow all their money from the U.S. government because they because can’t raise capital, and they are political as hell because they depend on the government. Over time they will seek and get untold favors that a private company won’t be able to get.”
Glozer added that cooperatives are “quasi-federal agencies…”
…Robert D. Reischauer, president of the Urban Institute and former director of the Congressional Budget Office, said rural electric cooperatives aren’t a good model for health insurance regardless of their track record.
“Those were providing a service where no private enterprise wanted to operate because the population density was too low and the capital costs were too high,” he said. “And what we’re talking about is trying to create a viable insurer that would operate in metropolitan areas and rural areas and suburban areas…”
Does the federal government need to create health insurance co-ops? No, says Hot Air:
The big secret with co-ops, though, is that they do not require the federal government to create them. People can band together to form their own co-ops, assuming they can put together the requisite capital. Several states, including Minnesota, have large co-ops providing coverage to hundreds of thousands of members. Congress doesn’t need to create federal co-ops or subsidize state co-ops, and especially don’t need to create them to crowd out insurers — which is what will happen when federal subsidies allow co-ops to unfairly compete against private-sector insurers in the marketplace.