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Non-Profit, Private Health Care Co-Ops Killed in the CR

April 13, 2011 - by Donny Shaw

It has long been clear that congressional Republicans are interested in breaking the health care reform law, not improving it. They’ve already attempted to repeal it entirely and a recent press release from Speaker Rep. John Boehner [R, OH-8] describes, proudly, how the government funding deal that the Republicans negotiated “undermines” the law. Its a sensible strategy given that the Republicans don’t have enough control of the government right now to fully repeal it — if they can gut the law and make it fail, they’ll win politically and, so the thinking goes, gain the influence to enact a full repeal.

But, unfortunately, the strategy requires killing some of the best ideas with potential for broad support since they may make people actually like the law when it takes effect. A prime example is the “Consumer Operated and Oriented Plan” (Co-Op) provision that would provide start-up resources for member-owned, non-profit health insurance cooperatives to provide competition with private insurers and potentially drive down costs. This provision, which has yet to go into effect, would be repealed under the government funding bill that is currently making its way through Congress.

I encourage you to read through the legislative text establishing the co-op program and see what you think about the idea:

(1) IN GENERAL. The term qualified nonprofit health insurance issuer means a health insurance issuer that is an organization (A) that is organized under State law as a nonprofit, member corporation; (B) substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and © that meets the other requirements of this subsection.

(2) CERTAIN ORGANIZATIONS PROHIBITED. An organization shall not be treated as a qualified nonprofit health insurance issuer if (A) the organization or a related entity (or any predecessor of either) was a health insurance issuer on July 16, 2009; or (B) the organization is sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.

(3) GOVERNANCE REQUIREMENTS. An organization shall not be treated as a qualified nonprofit health insurance issuer unless (A) the governance of the organization is subject to a majority vote of its members; (B) its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference; and © as provided in regulations promulgated by the Secretary, the organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.

(4) PROFITS INURE TO BENEFIT OF MEMBERS. An organization shall not be treated as a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.

In sum, the co-ops can’t be affiliated with any government bodies, can’t be creations of existing insurance companies, must be internally governed by their members, and must use all profits for lowering premiums or inreasing benefits. It’s the kind of thing that very well may not work, but, if it does, could revolutionize the industry and provide enormous benefits to not just participants in the co-ops, but all consumers of health insurance. And it would do it a manner that is pro-competition, fully private, and fundamentally democratic.

Repealing this will mean that when health insurance consumers go onto one of the new exchanges to buy insurance, all they’ll see is the same old options the have now — Aetna, Blue Cross, Wellpoint, etc. Consumers want more options, and I think a lot of people would be very happy to get involved in something that doesn’t pit their health care against a profit motive and gives them a say in what kind of care their money buys. That, of course, is exactly why the Republicans want to repeal it. Happiness with health care reform is the bane of the Republicans’ electoral success.

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