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Health Co-ops: The Three-card Monte of Healthcare Reform
Tuesday, 18 August 2009 04:26
by Stephen P. Pizzo

Feel the fool? Well, you should. Or at least you will if you let them get away with the latest health care reform bait and switch. This weekend the Obama administration backed away from the public health insurance option. Instead they say they are open to “health insurance cooperatives,” instead. Let me be as clear as I can be here; accepting health insurance co-ops over a government-run health insurance system is like trading an modest annuity for a Nigerian bank scam. And it's not just me saying that.

Take a recent study completed by the Commonwealth Fund on the pros and cons of health insurance co-ops. Here's a link to the full pdf file, but here are the highlights of that paper:

The key advantage attributed to purchasing cooperatives is risk-pooling...by joining together, small employers (and individuals) can spread risk by pooling. Unfortunately, this advantage can seldom be realized in practice...(because) insurers to use risk-rating to set premiums for firms that buy coverage outside of the co-op lower-risk employers will typically find it more advantageous to buy coverage in the outside market, since they will be offered a price that reflects their lower risk profile. When that happens the average level of risk of the employers remaining in the purchasing cooperative rise, and the cost of coverage will rise in turn. This will set off a chain reaction of spiraling prices andemployers bailing out of the co-op, destroying the pool’s viability.

It's Been Tried Already

In practice, purchasing cooperatives have not always met expectations. Although there are certainly successful models, there have also been some notable failures. In real-life trials, a significant proportion of co-ops have failed. The failures have included co-ops that initially seemed to be quite successful:

- The demise of the Florida Community Health Purchasing Alliances was perhaps the most notable failure because the co-op had once seemed quite successful. Originally a state-created consortium of 11 separate alliances, the cooperatives enrolled 92,000 people when enrollment peaked in 1998. But over the years, the Florida alliances had increasing difficulty attracting any but the smallest employers and gradually found themselves losing health plans. As a consequence, enrollment also fell, and the purchasing alliances ceased operations in 2000.
- The Texas Insurance Purchasing Alliance, begun in 1994, never reached the enrollment levels of the Florida effort, covering only about 1,000 firms and 13,000 people at its height. Difficulty in attracting employers led to the withdrawal of health plans, and the Alliance governing board ultimately decided that the operation was not viable and closed it down.

- The North Carolina Purchasing Alliances, which opened for enrollment in 1995, were patterned after the Florida model, but they struggled to attract employers throughout their existence, and the leaders finally admitted defeat in 2000. The Alliance in Colorado, established in 1995, the Alliance closed in the summer of 2002 after one of its three health plans withdrew from the state small-group market, a second capped enrollment, and the last decided to stop participating.
Co-ops will Compete on Quality

Proponents sometimes assumed that if a co-op offered a high-quality, high-value product, it would more or less sell itself. That assumption proved to be incorrect. Selling health insurance of any kind in the small-group market is extremely difficult without the cooperation and even enthusiastic support of insurance agents and brokers. Early efforts to save the cost of commissions by diminishing agents’ roles or eliminating them altogether backfired. Insurance agents not only did not sell purchasing co-op plans, they also became strong and effective opponents of the concept

Co-ops Can Compete on Price

Early proponents of cooperatives also hoped that these new organizations could offer prices somewhat lower than were generally available in the market. This hope was not fulfilled. With very few exceptions, premiums for employers buying through co-ops have not been lower than thoseavailable to small employers elsewhere. This failure to realize the expected price advantage is attributable to several factors:

Co-ops have not been able to reduce administrative costs. They have not had enough market share to bargain for discounts. And in many instances state laws have prohibited insurers from offering co-ops premiums lower than those they charge to employers outside the coop, even if the insurers’ costs are lower for co-ops.

Known and very popular cialis coupon which gives all the chance to receive a discount for a preparation which has to be available and exactly cialis coupons has been found in the distant room of this big house about which wood-grouses in the houses tell.

Co-ops Can Cover the Uninsured

Many supporters hoped that purchasing coops would attract a large number of employers who had not previously offered coverage. The prospects for success in this area were dimmed by co-ops’ inability to offer lower premiums. Even if co-ops had realized price reductions, however, most uninsured small employers would still not have been induced to offer coverage to their employees. The research evidence shows that even a 30 percent reduction in premiums—far more than co-ops could be expected to produce—would cause only 15 percent of currently uninsured small employers to offer coverage.

An analysis of the efforts to implement the purchasing cooperative model yields the following lessons:

1. The principal advantage that current co-ops offer to small employers is not lower premiums but the opportunity for individual employees to select different health plans from the variety the co-op

2. In the future, co-ops might be able to offer more attractive prices, but that would depend on reaching “critical mass” size. To offer attractive prices, a co-op has to be able to realize administrative savings and/or have bargaining leverage with health plans. Both these conditions require that co-ops
control significant market share.

3. (But) Achieving critical mass size is difficult. To persuade a number of health plans to participate and continue participating, a co-op must have a significant market share. But without the participation of a variety of highly reputable plans, it will be difficult for co-ops to attract the number of employers that would yield a significant market share. Furthermore, co-ops do not sell themselves. Without the support of (private, for profit) health plans and insurance agents, small employers will not seek out co-op coverage. But health plans and agents have often been hostile or, at best, indifferent, to the co-op model.

4. Even if co-ops could offer lower premiums, (which so far they have not) they would not substantially reduce the number of uninsured because the premium reductions would not be big enough to induce large numbers of uninsured employers and uninsured workers to opt for coverage.

5. Co-ops cannot be the vehicle for pooling high-risk, low-risk, and medium-risk employers. If co-ops follow (existing) premium rating rules or rules for accepting applicants that are significantly more permissive than those that apply in the outside (for profit) market, they will suffer from adverse selection and ultimately fail.

6.Co-ops are likely to become an important source of health coverage only if some significant change makes them the favored or perhaps renders them the sole source of coverage for particular groups (AKA.. the public option) This could happen... if government offered co-ops as the source of coverage for individuals who receive certain kinds of subsidies. Without a change of this sort, purchasing cooperatives are unlikely to become a major feature on the health care landscape.

So, pick a card, any card. But be warned, under none of the cards being hawked as a "comprise" will turn up a winner for you, or me, or our kids, or their kids. Without a strong, undiluted public health insurance option the same people who run the health insurance universe today will own it tomorrow, and all the tomorrows that follow.

Let your member of Congress know:

Decoding Health Care Reforms For Complete Idiots

Frankly it really pisses me off that I even have to waste our time discussing these non-issues. But, if you have one of these right wingnuts in your family or on your email list, send them this cheat sheet.

The Advanced medical directive euthanasia trap – “Sign here and Die”

Of course. Who could possibly doubt it? Killing bothersome and expensive oldsters is just a really, really, really, really late-term abortion, if you stop to think about it.

Which is exactly what people who believe this nonsense are not doing... thinking.

In fact the Advanced Medical Directive (AMD) is just the opposite of what these airheads are claiming. AMDs are not post-dated suicide notes. No one is taking your choice to live or die away, but rather memorializing that choice.

Say you want doctors to do all they can to keep you alive if you code out. Fine. Say so in your AMD and that's what you'll get. If you want them to pound on your chest until you're so tender the mortician stamps, “USDA Top Choice” on your forehead, the docs will do just that. They'll even bring in "the machine that goes 'BIGN.' If you want them to defibrillate you so many times with the zappers that you start picking up high-def TV channels in your head, they'll do that for you as well. But only if it's in your AMD.

But, if you're one of us who simply want the hospital let us pass away quietly, unzapped, un-tenderized, un-intubated, no one dragging you back from “the light” just to run up more billable procedures, and you have those wishes all signed and notarized in your AMD, then you'll get to slip away unmolested.

That's it. There's no “death panel,” there's no government plot to euthanize anyone, of any age, for any reason, including Sarah Palin's baby.

In fact, the only places where medical people can legally use medical procedures to kill people is in our prisons. And conservatives think that's just as it should be.

We Don't Want Bureaucrats Getting Between Us and Our Doctors

Well, bureaucrats come in many flavors. There's your basic government bureaucrat, who follows federal, state and local laws, rules and ordinances. They're inflexible, myopic, often not terribly bright and almost always annoying.

Then there's your corporate bureaucrat. You know, the bean counters, the guys and gals who spend their work days combing spreadsheets for... hell, who knows what. Corporate bureaucrats have ice-water in the viens. And they too have their marching orders, orders they enforce with even greater tenacity since, unlike federal bureaucrats, corporate bureaucrats can be easily and quickly fired.

Now, which bureaucrat do you prefer involved in your health care?

Neither, you say. Oh, sorry. “None of the above,” was not one of your choices. You get one, or you get the other, or you get a combination of the two. Right now most of you have the insurance company's corporate bureaucrat between you and your doctor. You will never see them, or for that matter probably ever have any form of direct contact with them. The only evidence they exist comes when your doctor returns to the exam room shaking his or her head and announces, “Sorry, Burt, but your insurance doesn't cover that... (. fill in the blank – medication, procedure, hospital stay, treatment. )

That decision was made by an insurance company bureaucrat while you where sitting in that cold exam room doing your damnedest to keep the back of you exam robe closed. The denial of service was made either over the phone or computer with your very own insurance bureaucrat. It's sort of like the old movie Harvey... you have your own invisible insurance company bureaucrat who follows you where ever you go... if you go anywhere near the health care system.

So, how's that been working for you? If you like it, fine, keep it. But don't pretend that the current system doesn't inject a bureaucrat between you and your doctor.

One more observation: if replacing that corporate bureaucrat with a government bureaucrat is so socialistically awful, then why aren't you and your fellow morons out there demanding an end to Medicare? "Hell no, we won't take Medicare!"

And let's not forget the Veterans Administration. Let's make all those former soldiers go out and buy health insurance like everyone else, the little leeches. Right? Well, either that's right or you're wrong about the public option.

The Public Option is Socialized Medicine

“Paging doctor Marx, Dr. Marx, Dr. Engels needs the communal anal-thermometer, stat..”

Look you knuckleheads, we already have socialized medicine. Every time you figure out what you're paying for health insurance every year, add to it approximately $1100. That's what you're paying to cover the 50 million un- and under-insured Americans. Yep.. you're paying for all that “free government” health care that has to be provided by hospitals by law.

So, another hard choice confronts you: Do you want to change the law, or change the system? Want to just deny medical care to the uninsured? "Let'em eat camomile!"

Or we can change the system to enlarge the actuarial pool by making insurance affordable to 98% of Americans. One way to do that is to inject a low-cost public run plan into the mix, forcing down costs, creating real competition for private insurance companies for the first time, and sparking a revolution in medical industry efficiency, technology and delivery.

If you don't want to do that, then maybe you should reconsider your opposition to forced euthenasia, not for Sarah Palin's baby or granny, but uninsured patients.

They Will Ration Medical Care

Whatsamatta bucko? Were you born with an ugly nose? Got Gucci-size bags under your eyes? Want bigger, perkier boobs? Well if so, you're right. You're not getting them paid for.

If you really want your beak chopped and lowered, your bags emptied or your boobs hydraulically lifted, you're going to have pony up the dough yourself.

So, if that's what you mean by rationing of medical care, you're right.

Oh, and one more thing. You think there's no rationing right now? Just try to stick your private insurance company with those kind vanity procedures and see how fast they tell you to get used to your body the way it is.

Another one more thing. This isn't part of any of the reforms I've read about so far, but ought to be. We Baby Boomers are about as self-indulgent bunch as you'll ever meet. In our 60's now we insist on trying to do the same things we did when were 25. Which has meant we're two-legged ATM machines for the orthopedic industry.

Ortho docs see the same guys over and over, coming in for another knee job because they're still out there on the basketball court trying to slam dunk with the kids. Or the gal with her fourth torn rotator cuff from playing tennis. They come in with one demand, “Fix me again so I get back out there on the court.”

If I were medical tsar I'd have a rule: One rotator cuff, one knee tendon, one ankle, one elbow fix, one sports-related fix per geriatric patient. If they come back in again, with the same problem, due to the same age-denying stupidity, they get handed a cane. At least that will keep them off the court, for good. Fixing the same people, over and over again, for the the same self-inflicted wound, is not good medical care, it's enabling. And we simply can't afford it. Some would call that “rationing.” I call it tough love.

(Yeah, yeah, I know..."what about smokers and over-eaters." Hey, give me a break. I can't fix everything in a single column.)

The public option will destroy private health insurance

Last year the health insurance biz pocketed $12 billion in profits. They're not going anywhere. And here's a big reason why.

We Baby Boomers are just now seeing our body-odometers turn 250,000 miles. Our parts are starting to wear out. (Trust me on this you youngsters.) Prostates swell to the size kiwi fruit, hemorrhoids deserve their own athletic supporters, the old ticker misses beats, and the plumbing... don't even ask.

We Baby Boomers are going to be worth trillions upon trillions of bucks to the insurance industry over the next thirty years or so, and they're not about to cede all that gold to some government option.

What they will do is what all capitalist enterprises always do when conditions change – adapt. They will find ways to compete with the public option. And if history is any gauge, the private sector usually does pretty damn well when it's main competitor is a public entity.

But the insurance industry claims that a public option would be non-competitive, and would destroy the private insurance system. (Before they made that claim they should have asked themselves if any of us would care, in the first place.) But what they really mean is that they want to talk about competitiveness, not actually have to compete against a worthy and capable opponent. To which I say, tough nuggies, assholes. You brought it on yourselves. You fouled your own nest. You killed your own golden goose in search of platinum eggs.

So, either compete or retreat. Either way is just fine with us.

Despite their threats of mass suicide, private insurance companies will compete. And they will compete hard against the public option. They will compete on service, which will result in better service – for both public and private plans. They will compete by charging more for plans that cover “boutique” treatments and services the public plan doesn't cover – and probably shouldn't anyway.

And they will suddenly "discover" ways to insurance some of those 50 million folks they once refused to cover who might now be attracted to an affordable public plan. They will do so by offering all kinds of “ala carte" and budget plans they now swear they just can't do.

Now, if you guys out there disrupting town hall meetings want to know who misled you to get you there, watch this video:

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