Health Insurance Co-ops – a $3.8 Billion Null Set

Two years ago, health insurance co-ops were all the rage, a Republican alternative to the public option. The public option – Medicare for All – was dropped from the ACA; somehow the co-ops remained. No one really expects many people to obtain health insurance from one of these co-ops. It was mainly political theater, despite the $3.8 billion allocated to subsidize start up.

Tim Jost raised good questions about these co-ops in the NYT Prescriptions blog in the dog days of August 2009 (more than once). In private practice, I helped start a small non-profit health plan from scratch, with 3 major hospitals leading the way. It took years and was amazingly difficult. How will “consumer groups” start a health insurance company from scratch? Possibly by outsourcing the entire project to Aetna.

Nevertheless, HHS dutifully released the co-op funding opportunity description on July 28, 2011. Up to $600 million in loans are available for start up funds, with $3.2 billion saved for the operational phase. Applications are due by December 31, 2012.

If these co-ops enroll more than 100,000 uninsured people by 2015, I’ll eat my hat. Perhaps we can use the $3.8 billion on something more useful.

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