• 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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    • It can be very difficult for individual consumers to evaluate competing insurance plans: Is there a meaningful difference in the list of exclusions or other fine print that one company has compared to another?. Are the doctors, laboratories, and hospitals that accept one plan better qualified than those that accept another plan? Is one plan more likely to delay or deny claims? ( Is there a meaningful difference in the way companies define medical necessity or distinguish between accepted and experimental treatment?) How likely is the company to raise rates? At times, it can also be difficult for a cosumer to fight an adverse decision. If a coop can answer these questions and serve as an effective advocate, outsourcing to Aetna or whichever company offers the best deal might not translate into business as usual.