Non-Profit Cooperatives - How's That Supposed to Work?

It's not... (3.50 / 2)

...that's why the Repubs and the ConvervaDems are okay with that... they will be no threat to healthcare profits.

The big savings is through efficiencies of scale, bureacratic streamlining, and a set of rules that everyone has to follow.

Otherwise, "co-opts" or even "public options" will be dumping places for the sick and disabled that will add another layer of inefficiency and will not have the national market share necessary to force cost savings from for-profit healthcare providers.

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by: razorgirl @ Wed Jun 24, 2009 at 14:43:20 PM CDT

My favorite line of supporters of the status quo... (0.00 / 0)

that they trot out to discredit a public plan is, "There'll be bureaucrats between you and your doctor"!  Like the insurance company bureaucrats who deny you coverage from your doctor are figments of our imaginations.

I'll take a bureaucrat that answers to my vote, before one that gets a bonus if they deny me coverage, any day!

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by: BobB @ Wed Jun 24, 2009 at 14:51:14 PM CDT

[ Parent ]

First (0.00 / 0)

Before I can explain how such a setup might actually work, someone is going to have to explain to me what the setup is. The word "co-op" tells me nothing except that the entity is theoretically owned by the policyholders. And the single word is all that I've heard. I presume there are people somewhere who know how these cooperatives would be formed and what the basis for membership would be, but that information has not reached th public.

But I will comment that I don't think the public option is going to have great economies of scale. Most Americans have employer-sponsored health insurance. Only a minority are even going to be eligibl to choose between a public and a private option, and a significant fraction of those will distrust govrenment bureaucrats more than private bureaucrats. Private companies, of course, must be organized on a state-by-state basis, but it seems likely that big companies in big states such as New York, Califronia, and even Illinois may have as many members as the public option.

Bill Thomasson

Permission to reprint explicitly granted

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by: wathomasson @ Wed Jun 24, 2009 at 21:06:29 PM CDT

So you are saying that the best possible (0.00 / 0)

public option would still be inadequate to the task of becoming a seed for eventual single payer?

As for not knowing what the co-op setup is, I'm simply asking you to imagine the best possible arrangement, regardless of what is maybe being proposed. But it sounds as if you believe that even if the co-op, whatever it is, were as good as the best public option that it still would be inadequate to the task needed.

What if the co-op subsumed medicare? What if the co-op were nationally chartered and national in scope? Is there any possible arrangement, that is at least semi-private, and of course, non-profit that you could imagine working. By working I would mean forcing the private insurance to reduce costs in order to compete with this thing. And by working meaning that many private companies would go out of business leaving only niche companies serving outlier needs.

Jeff Wegerson

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by: wegerje @ Wed Jun 24, 2009 at 22:47:26 PM CDT

[ Parent ]

Public option, single-payer, and co-ops (0.00 / 0)

I cannot seriously imagine the public option becoming single-payer, if only because the conceptual foundations of the two ideas are diametrically opposed. The public option is based on the beleif that people deserve a choice of the bureaucrat that administeres their health insurance. Single-payer is based on the belief that people should not have a choice, but that everyone should have the same plan with the same bureaucratic administrator.

As for the idea of some sort of co-op subsuming Medicare, it just doesn't compute. The whole point to Medicare is that it is mostly supported by taxes. Few people would sign up for it if it weren't. You simply can't put a taxpayer-supported program and a premium-supported program that has to attract subscribers (meaning any sort of public option, semi-private or not) into the same administrative basket.

And it's important to recognize that cutting costs has very little to do with insurance. It calls for cutting doctor fees, making healthcare delivery more efficient, or both. Claypool seems to believe he sees a way to make healthcare delivery more efficient. I assume that means not automatically seeing the doctor at every routine callback to check your blood pressure. Although it can be convenient to be able to mention minor concerns without having to make a special appointment.

Bill Thomasson

Permission to reprint explicitly granted

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by: wathomasson @ Thu Jun 25, 2009 at 09:08:16 AM CDT

[ Parent ]

Flying the co-op (4.00 / 1)

I cannot seriously imagine the public option becoming single-payer, if only because the conceptual foundations of the two ideas are diametrically opposed.

I agree with this, although no doubt for different reasons. Single-payer is based on the idea that health-care is a human right, a public service like Police or Fire protection that everyone should be entitled to. The public option, like the current system, treats health care as a commodity; although you might get a subsidy to help, it's still something you have to buy.

The public option is based on the beleif that people deserve a choice of the bureaucrat that administeres their health insurance.

This sounds nice, but doesn't work, for a number of reasons. For one thing, most of us don't have a choice, because the decision is made by our employers. For many others, we don't choose our insurance company, it chooses us; we are stuck with whomever will cover us at a reasonable rate. For those who do have a choice, it's not really possible to make an informed decision; you really have no idea whether an insurance bureaucrat is going to screw you over in time of need until you actually reach that time of need, and by then it's too late to switch to a different one.

Single-payer is based on the belief that people should not have a choice, but that everyone should have the same plan with the same bureaucratic administrator.

No, single-payer is based on the belief that you shouldn't have to deal with a bureaucratic administrator at all. Under single-payer you can go to any doctor and you never have to worry about who will pay for it.

And it's important to recognize that cutting costs has very little to do with insurance.

That's your opinion, and not a very well-informed one. Insurance companies consume hundreds of billions annually in overhead which does nothing to improve the delivery of care. Countries that have gotten rid of for-profit insurance companies spend far less than we do while providing better care.

"In order for somebody to win an important, major fight 100 years hence, a lot of other people have got to be willing -- for the sheer fun and joy of it -- to go right ahead and fight, knowing you're going to lose." -- I.F. Stone

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by: Gary Kleppe @ Thu Jun 25, 2009 at 11:17:57 AM CDT

[ Parent ]

Observations (0.00 / 0)

" although you might get a subsidy to help, it's still something you have to buy. "

Somebody has to buy it, because doctors and hospitals still expect to get paid. The question is the route the money takes on its way from taxpayers/healthcare consumers (essentially the tsame people) to the provider.

"you really have no idea whether an insurance bureaucrat is going to screw you over in time of need until you actually reach that time of need, and by then it's too late to switch to a different one. "

This is not entirely untrue. Yet people do feel they can trust one bureaucrat rather than another. You feel you can trust government bureaucrats. I have my Medicare supplement through AARP because I feel I can trust this seniors organization to keep an eye on things.

"No, single-payer is based on the belief that you shouldn't have to deal with a bureaucratic administrator at all. Under single-payer you can go to any doctor and you never have to worry about who will pay for it."

I can't understand why you would say anything so patently absurd. You yourself have quoted the single-payer legislation, which restricts payment to procedures that are medically necessary. This means that, just as now, there will be a bureaucrat deciding what is medically necessary. (And there d****d well had better be. The blank check you imply would be disasterous. IMHO, for patients as well as the Treasury.) The only difference is whether the decision will in every case be made by a government bureaucrat or by your choice of a government or private bureaucrat.

"Insurance companies consume hundreds of billions annually in overhead which does nothing to improve the delivery of care."

I'm not sure that "hundreds of billions" is accurate. But regardless of the precise numbers, the amount involved is not a truly major factor in costs. Reduce it from 13% to 3% and you're still not seeing a huge difference. The overwhelming majority of the money goes to healthcare providers, and that's where most of the savings have to come if you're really going to cut costs.

"Countries that have gotten rid of for-profit insurance companies spend far less than we do while providing better care."

Can you name a single country that has gotten ride of for-profit insurance companies? As I understand, the countries that currently don't have for-profit insurance companies in fact never had them. And the main reason their healthcare costs are so much lower -- and this is equally true in countries such as Switzerland that do base their universal healthcare insurance systems on for-profit companies -- is that the doctors are paid so much less. In much of Europe, a doctor in clinical practice makes less than a pharmaceutical company sales representative.  

Bill Thomasson

Permission to reprint explicitly granted

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by: wathomasson @ Fri Jun 26, 2009 at 10:32:23 AM CDT

[ Parent ]

Health care providers and costs (0.00 / 0)

Yes, someone has to pay either way, but there's a big difference between making people buy something individually versus buying it with public money and giving it away to whoever needs it. One is a right, one is a privilege.

While I'm all for people getting in touch with their feelings, they don't generally provide a sound basis for rational decision-making. A better basis would be not do I feel I can trust someone, but is there a way to hold him or her accountable? A public official who makes bad or unfair decisions can be voted out of office. (If it's an appointee, the official who appointed him or her can be voted out.) With private insurance, yes, I might be able to switch providers, but again, by the time one has screwed me over it's too late to do that, and it depends on there being other providers willing to take me at a reasonable rate.

"This means that, just as now, there will be a bureaucrat deciding what is medically necessary." Not in the same way. Elected or appointed officials or boards will make broad decisions about what kinds of treatments are necessary. Hospital administrators will decide on broad guidelines for their staff. What you won't have is the micro-management of care that you do now to the point where the hospital has to check your insurance before doing anything else.

Also, multiple payers and "deciders" in the system tend to lead to multiple tiers of care quality. If single-payer's administrators say I can't get treatment X for symptom set Y, then that's going to be true for everyone across the board.

I did a little searching on the cost numbers. Public Citizen cites a Harvard study indicating the overhead of private insurance to be about $400 billion, at least $286 billion of which would be saved by going to single-payer. This study was five years ago, so if anything the numbers will have gotten larger. PNHP cites a study by University of California, San Francisco researchers published in Health Affairs in which a conservative estimate has private insurance overhead consuming about twenty percent of spending. That's not chump change.

Canada's single-payer system got implemented in the early seventies. If you look at their health care spending as a fraction of GDP you can see it start to level off around then while our country's kept sloping up. I don't know what Canada had before that but it must have been some sort of private financing.

Certainly you could save money by paying doctors less. But having good doctors is important in maintaining quality care. Cut their pay too much and students won't want to go into medical school, especially if the tuition stays as high as it is. Insurance people, on the other hand, have nothing to do with quality care, and in fact are a pretty big impediment to it.

"In order for somebody to win an important, major fight 100 years hence, a lot of other people have got to be willing -- for the sheer fun and joy of it -- to go right ahead and fight, knowing you're going to lose." -- I.F. Stone

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by: Gary Kleppe @ Fri Jun 26, 2009 at 14:14:56 PM CDT

[ Parent ]

Further observations (0.00 / 0)

"Yes, someone has to pay either way, but there's a big difference between making people buy something individually versus buying it with public money and giving it away to whoever needs it. One is a right, one is a privilege."

Essentially you're saying that my rights depend on whose pocket the money passes through on its way from me to them. Or no, actually, since the pocket will be the same under the public option as under single payer. You're saying my rights depend on whether my payment is called a tax or a premium.

Sorry, I'm not buying it.

"and it depends on there being other providers willing to take me at a reasonable rate."

Which is a given under the Obama healthcare plan.

"What you won't have is the micro-management of care that you do now to the point where the hospital has to check your insurance before doing anything else."

So why, pray tell, do you think single-payer will be so different from Medicare? I really find it ironic that single-payer advocates describe their program as "Medicare-like" and then present it as behaving in a way nothing at all like we know Medicare does.

Medicare does not require pre-approval, of course. But I've only had one private plan that did, and that was not (on paper) a for-profit company. In fact, information that came out during bankruptcy proceedings suggested it was periously close to being a scam masquerading as a union health plan (without actually acting as a bargaining agent for anyone).

"If single-payer's administrators say I can't get treatment X for symptom set Y, then that's going to be true for everyone across the board."

Aren't you forgetting about out-of-pocket payment?

The hospital told me it didn't think Medicare would pay for my prostate biopsy. I told them to go ahead anyway. If Medicare rejected the claim (it actually paid without a quibble -- it was my colonoscopy that got pushback) I would pay out of pocket.

"That's not chump change."

We're actually disagreeing on two points. One is how much difference a 10-15% cut in premiums will make in the long run. The other, which hasn't come up explicitly, is how much Obama's National Health Insurance Exchange will cut insurance company overhead. Sales and underwriting expenses for individual/small business policies will essentially disappear, and that's more than half of current overhead. And competition from the public option will ensure that these reductions in overhad actually get passed along to the public.

"I don't know what Canada had before that but it must have been some sort of private financing."

"Private financing" can mean out-of-personal-pocket. Since health insurance (as distinct from hospitalization insurance) wasn't notably common in the US until the mid-late 1960s, and was far from univeral until some years after passage of Medicare and medicaid, and since several Canadian provinces had single-payer plans before adoption of the national plan, I think it's reasonable to guess that out-of-personal-pocket payment is mostly what these plans replaced.

"Certainly you could save money by paying doctors less. But having good doctors is important in maintaining quality care. Cut their pay too much and students won't want to go into medical school, especially if the tuition stays as high as it is."

So essentially you are saying that the only way to significantly cut healthcare costs in the long run is by more efficient delivery. There are certainly savings to be had in that direction. As I've mentioned elsewhere on PSB, I'd dearly love to know what Forrest Claypool has in mind.

Bill Thomasson

Permission to reprint explicitly granted

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by: wathomasson @ Sat Jun 27, 2009 at 14:24:43 PM CDT

[ Parent ]

Cool (0.00 / 0)

Economies of scale are important but don't discount the bigger problem of health insurance companies using human illness to pay executive level salaries and keep stock prices rising. If a non-profit co-op system takes the profit motive out of health care decisions then we'll be in a much better situation.

Theoretically, it could allow customers to vote on the board of directors who set the policies of the co-op. Although I don't know if that type of member owned co-op is what they have in mind.

Remember that a government run single-payer or public option can be dismantled or weakened the next time we have another Bush style President and Congress. A member owned co-op answerable to their customers would not be so easily monkeyed with by a hostile administration.

The ideal situation would give people a choice between non-profit co-ops or a public option with the elimination of for-profit health insurance.  

Check out the German system.
http://economix.blogs.nytimes....

We'll need a lot more health care if we don't do something about climate change so there's where I'm focusing this week.  

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by: Willinois @ Fri Jun 26, 2009 at 16:12:06 PM CDT

Thanks for the link (0.00 / 0)

It's good to have a real understanding of how the German system works. Not in evry detail as my previous impression.

When I was checking out univeral healthcare plans that weren't single-payer, I concentrated on Japan because some physicians there are among my clients (and friends). The Japanese system is in fact tri-partite:

1. Employees of large companies have their healthcare costs paid directly by their employers (no insurance companies involved).

2. Professionals and employees of small businesses are enrolled in plans run by their associations. As far as I can tell, these plans are somewhat analogous to union health plans in the US.

3. Anyone who would otherwise fall through the cracks -- mostly farmers -- is enrolled in a premium-supported, govrenment-run plan similar to the proposed public option in the US. As under the Obama plan, low-income individuals have their premiums subsidized.

Bill Thomasson

Permission to reprint explicitly granted

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by: wathomasson @ Sat Jun 27, 2009 at 14:32:36 PM CDT

[ Parent ]