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Subject: What in the heck is a healthcare coop?
Posted by: Madman
- [20131721] Mon, Aug 17, 2009, 22:36
I'm talking about the Senate Finance Committee's likely proposal for healthcare reform. Some background: Time (note that the integrated co-ops they describe will likely bear little resemblance to what is being discussed). Also see this Q&A: RealClearPolitics
And, specifically, I'd like to know how they differ from plans like Blue Cross Blue Shield of North Dakota, which is a member-owned non-profit mutual company. Note also the composition of their board. Exactly how does that differ from a co-op?
I know biliruben and others have been critical of non-profits dominating their local markets (see 447 where ND is one of about 10 highlighted red states ... I think 6 of the 7 listed states are dominated by non-profits), so is the idea that you need to have several non-profits competing against one another? I guess there's some sense in that, but it seems unreconcilable with Conrad's idea of state-by-state coops and also a minimum membership size of 500k ... which almost exactly describes BCBS-ND alone.
Or maybe it is that the non-profits that exist have been "corrupted" (speaking hypothetically here) and need to be replaced with a new set of non-profits. If that is the logic, what is going to be put into place to prevent the new set from being corrupted?
I find it especially bizarre that Conrad keeps talking about the success of the co-op model and continually denies extremely similar structures that already exist in most major markets where, for whatever reason, the big private for-profits don't care to tread as aggressively (or can't, depending on your perspective).
At any rate, I've asked a ton of actuaries what in the heck the SFC co-ops are supposed to be or what they are supposed to do that the sundry non-profits in the insurance market don't do already. So far, no dice. So I thought I'd throw it out here to an audience with a broader background set. |
| 1 | Boldwin
ID: 457431818
Tue, Aug 18, 2009, 20:40
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My impression was that they were doctor owned, as opposed to patient owned. The members are doctors, not the public.
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| 2 | Boldwin
ID: 457431818
Tue, Aug 18, 2009, 20:48
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Or maybe not. It does sound interesting so long as the government can be kept out of it.
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| 3 | biliruben
Leader
ID: 589301110
Wed, Aug 19, 2009, 07:24
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I have no idea, and haven't seen any details of use. I haven't spent time finding out, either. Given it's Conrad, I assumed it was a disingenuous attempt to derail the public option. He's bought and paid for.
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| 4 | biliruben
Leader
ID: 589301110
Wed, Aug 19, 2009, 08:15
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I assume the essential model would be a combination provider-insurer. Sounds like a nightmare to run and stay solvent, if it were any decent size to get pricing power. Someone not in the pocket of the insurers will have to explain the advantages to me.
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| 5 | Boldwin
ID: 457431818
Wed, Aug 19, 2009, 17:24
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Republicans are never going to support this because liberals would still sneak as many poison pills as they could into the bill. They would make it government run instead of stakeholder run.
They would still sneak in government unlimited access to individual bank accounts.
They would still eliminate privacy by spreading or information learned in healthcare, across all of government.
They would still sneak in government panels pushing for limiting treatments. They even snuck that into the stimulous bill. Of course they would add enabling language to further push for this in any healthcare bill.
They would still sneak measures insisting that it would be illegal to check if the recipient was an illegal alien.
They would still try and sneak in demands that all doctors provide abortions regardless of conscience.
It will be loaded with stuff no conservative could compromise on.
Insurance is still their bogeyman and scapegoat and there would surely be damage done to them in this bill.
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| 6 | Tree
ID: 41371322
Wed, Aug 19, 2009, 17:39
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It will be loaded with stuff no conservative could compromise on.
you wouldn't know a compromise if it walked up to you, shook your hand, and introduced itself as a compromise.
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| 7 | sarge33rd
ID: 17681812
Wed, Aug 19, 2009, 17:43
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Boldwin...instead of screaming out your inner fears, try some truth one time. JUST ONCE...please.
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| 8 | Pancho Villa
ID: 307591917
Wed, Aug 19, 2009, 18:59
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They would still sneak measures insisting that it would be illegal to check if the recipient was an illegal alien.
Why would that matter?
An undocumented resident has received $2.3 million in care since July 2000, and continues to receive care at a long-term facility costing $25,000 a month. Internal auditors questioned his eligibility since Medicaid covers only emergency-related care for the undocumented.
Hales said the man is hooked up to several devices and if they were removed, he would need to return to a hospital, where Medicaid would have to pick up the tab. It's less expensive to care for him at the facility, he said.
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| 9 | Tree
ID: 41371322
Wed, Aug 19, 2009, 19:05
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it matters in the same way people with medicare don't want government run health-care.
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| 10 | Madman at work
ID: 317171810
Thu, Aug 20, 2009, 10:24
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it matters in the same way people with medicare don't want government run health-care.
I don't understand this criticism. Medicare only minimally dictates healthcare; it is largely fee-for-service based, with the physician given significant control. This is one reason why it costs the government $1,500 a month to insure someone in Miami-Dade county.
It is not a contradiction to be on medicare and also decry government-run healthcare.
The problem is that the lack of government control is bankrupting Medicare.
BR -- Someone not in the pocket of the insurers will have to explain the advantages to me. I'm in the pocket of the insurers, and I can't explain them to you. That's why I'm asking the question; I genuinely want to know how this is supposed to work, even in theory. Give me the pie-in-the-sky dream world so I at least understand where this is coming from ...
Robert Laszewski calls it a "camel" when the Congress was told to design a horse ... the best that the committee process could come up with.
On the radio yesterday, Mark Pryor (D-Ark) said that there are 15-16 states that have well-run co-ops. Anyone know what states those are? The only two citations I've seen are rather small integrated delivery plans ...
Bold -- The government dictates in HR3200 are well beyond the government public plan. I don't think co-ops solve the issue of government-definitions and government-control of insurance options or delivery of care funded through the Exchange. Those issues rest in the oversight committees and created bureaucracies.
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| 11 | biliruben
Leader
ID: 589301110
Thu, Aug 20, 2009, 11:10
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I have idea what Conrad means. I have read a summary by Thoma:
1. Co-ops are not very well defined.
2. It is not clear that Co-ops will lower costs. For one, you need at least 500,000 members to have enough bargaining power to matter, and even then it just puts you on an even keel with existing companies. That isn't enough bargaining power to lower costs. Also, will co-ops lower administrative costs? Probably not much.
3. Some reports say the plan would come with 6 billion in start-up funds. But there are still large barriers to entry.
4. This was an eye opener. Blue Cross-Blue Shield, which already has substantial market share in some areas (e.g. 90%), is a non-profit and would likely qualify as a co-op. Though they would likely come under some new regulations in terms of who they must cover if they did change to a co-op, as well as other restrictions, it doesn't seem like this would bring about much change.
5. Some states already allow co-ops, e.g. Iowa, and they have not generally been successful.
6. On coverage, how will that work? Will these co-ops be like Savings and Loans (to which they are often compared) where membership is restricted to certain groups, or will they be forced to provide insurance to anyone who wants it? If so, how do you stop firms from subtly using non-price mechanisms to discourage high cost patients from joining? Exactly how coverage will be regulated is vague in the reports I read, though perhaps there's an actual proposal somewhere that is more informative.
7. Republicans won't support this either, so why are we bothering with it?
...and Cowen, for those with a libertarian fetish.
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| 12 | biliruben
ID: 461142511
Thu, Aug 20, 2009, 15:13
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Ezra Klein on where the co-opt notion came from:
In early June, Max Baucus asked Kent Conrad to solve this argument. Conrad came up with the co-op proposal. And I literally mean "came up" with it. Conrad told me that the idea emerged "out of conversations in my office after we were asked to see if we couldn't come up with some way of bridging this chasm." To put it bluntly, the co-op does not solve a policy problem so much as it solves a political problem. That political problem was, "How do you finesse a compromise on the public option?"
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| 13 | Madman
ID: 20131721
Thu, Aug 20, 2009, 22:01
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I've got an answer to the BCBS-ND question ... specifically, the co-ops the SFC is proposing will have member-elected boards.
I don't think any BCBS company can qualify as a co-op under that stricture, Mark Thoma's expertise on healthcare insurance companies notwithstanding (sarcasm). Specifically, mutual BCBS companies generally give certain voting rights to all policyholders, not members. The distinction is huge, since it means corporate customers, which make up 90% of the members, have voting rights.
The co-ops as proposed will operate only in the Exchange, and therefore each member, literally, will have an equal voice in the composition of the Board which has oversight responsibilities to management which then makes the decision. As you can see, this tiny distinction in voting rights will make an even smaller distinction in outcomes.
Therefore, the co-ops will solve one of the main problems that progressives have brought against the private insurance industry -- namely that non-profit mutual companies have underbid their competition too aggressively and have therefore achieved market dominance in certain areas. The co-ops, by construction, will be yet another non-profit competitor in that space. I think there are only 3 significant non-profit competitors in the Little Rock market, and a co-op would make a fourth. This is in addition to the various national players, of course.
.......
I'm getting rather sick of the bargaining power argument, so let me put that one to rest here and now.
1) Medical care is local. A 50,000 person co-op in a local community will have quite a bit of bargaining power with the local hospital.
2) An Arkansas plan that can boast 300,000 Alaskan eskimo members, for example, won't win any greater concessions from Little Rock facilities. This basic logic puts the lie to the notion that a national public plan will be able to win better concessions from the neighborhood clinic than an insurer with local market dominance.
3) Bargaining power for devices and pharmaceuticals is a bit different, since you are in a national marketplace for those. Smaller local plans generally use intermediary vendors to achieve returns to scale in those transactions. PBM's for pharmaceuticals, for example. So small companies can achieve some portion of the returns-to-scale for those services.
4) I am convinced that the returns to scale in claims payment systems are somewhat overblown. I can't get into specifics here, but that would be the strongest of a slew of weak arguments in favor of larger plans. Fortunately, no healthcare reform advocate seems to even consider what will make efficient admin on the claims payer side, so I am responding to an argument that I'm creating here.
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| 14 | Perm Dude
ID: 154552311
Thu, Aug 20, 2009, 22:14
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It doesn't appear co-ops are altogether well thought out for this plan, but I would have to think that the advantage of #3 would blow away the non-advantage of #2.
In fact, Bush's Medicare Part D prescription drug program (which, ironically, will end up costing more than HR3200 is projected to cost over ten years) is one of the things about to blow a hole in the federal budget.
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| 15 | Boldwin
ID: 207322022
Thu, Aug 20, 2009, 23:32
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7. Republicans won't support this either, so why are we bothering with it? - bili
Because if Troy won't welcome a defeat with open arms, maybe you can sell them on a horse.
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| 16 | Madman
ID: 20131721
Thu, Aug 20, 2009, 23:40
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PD 14 -- my point is that small plans take advantage of the returns-to-scale today (#3).
Regarding the cost question, both estimates are playing funny with numbers.
Regarding your second argument, noting that a variety of previous spending programs are blowing a hole in the budget is an incredibly weak justification for blowing another hole in the budget.
And I'll note you are talking net numbers, which doesn't consider the opportunity cost of the tax hikes and spending cuts. Specifically, we will take cost savings from Medicare and instead of using them to shore up the federal government's dismal finances, we'll use those "savings" (better hope those estimates are good!) to splurge on another pet project.
Too bad we have a President who is defining "success" as kicking the can down the road and limiting the additional damage he's doing to that of his failed predecessor.
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| 17 | Boldwin
ID: 207322022
Thu, Aug 20, 2009, 23:49
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I think the last thing you can fault Obama for is lack of desire to socialize medicine. I think he'd happily forego a second term to get it done. Those townhalls will have to have had a miraculous effect on a number of democrats to avoid him getting it 100% thru with the nuclear option.
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