I had really reached the point of banging my head against the wall in trying to understand the proposal by Sen. Kent Conrad (D-ND) to establish co-op health plans as a healthcare reform compromise instead of a public plan that competes with private insurers.
Looks like I’m not alone. Here’s what Deutsche Bank analyst Scott Fidel had to say about Conrad’s co-op plan proposal:
“These plans are defined as ‘non-profit, non-government, consumer-driven insurance options in every state.’ The irony is that this concept perfectly describes the non-profit Blues, which already exist in almost every state. It has frankly been somewhat surreal to observe many policymakers in D.C. over the past few days scramble to express so much excitement over this proposal as the potential model for reform; there seems to be a lack of recognition that nearly identical entities already control number one commercial market share positions in a majority of the states in the U.S. We are thus left asking the question of whether the plan here is that the federal government will essentially create and fund these new entities (perhaps they can brand these new Consumer Collectives the “non-profit Reds”) which would then compete for members in each state with the non-profit Blues?”
I think you’re missing something Scott. But don’t feel bad. So am I.
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One thing you seem to have missed is that the Blues aren’t nonprofits, which seems pertinent.
According to wikipedia, they are franchisees with a variety of ownership structures. In any case, the largest is Wellpoint, which is in 14 states and covers 35 million people, and is also part of the S&P 500 index: http://www.wellpoint.com/business/default.asp
However, you are right that there are other nonprofits out there (Kaiser, for example). I just did an overview of the cooperative ones over at my blog. Please drop by and comment.
More than 30 Blues plans are not-for-profit. They serve something like 40 million lives. Add in not-for-profits like Kaiser, Group Health, Harvard Pilgrim, HealthPartners, etc…and a big portion of the health insurance industry is not-for-profit. There is also no shortage of examples of group health purchasing coalitions (including lots of failures). But the real question is whether this co-op proposal solves the problem at hand. I’m having a hard time seeing it. That said, Carl McDonald of Oppenheimer has some good comments on the whole co-op concept and how it might work.
http://blog.corporateresearchgroup.com/2009/06/15/co-op-health-plan-idea-raises-lots-of-questions/