Rockefeller to Baucus: Co-Ops Are No Substitute for a Public Health Insurance Plan

Senator Jay Rockefeller, Chairman of the U.S. Senate Commerce, Science and Transportation Committee, has been very up front about his support [1] of a public health insurance plan option as an important element of reform required to help contain health care costs and keep insurance companies honest:

“Without the steady, positive influence of a public plan option in the marketplace, we will never truly solve the health care crisis in this country. Private health insurance has a long history of cutting people off or charging too much for too little... Private insurance companies want to have their cake and eat it too. They want health care reform to earn them maximum profits if they start covering millions of uninsured Americans. But they are not willing to abide by the fair rules, oversight and cost containment that Americans deserve. Shared responsibility — that includes insurers — is the only answer and a public plan is the only real solution.”

With the only apparent objections to a public plan being that private insurance companies would not be able to effectively compete against it, insurance company supporters strove to come up with an alternative to a choice the vast majority [2] of the American people want. They came up with the innocuous sounding "health insurance cooperatives."

Perhaps they thought people would be fooled because many of us trust nonprofits. But most people were not fooled. Jacob Hacker called cooperatives [3] “a political solution to a political problem, unlike the public plan, which is a policy solution to a real world problem.” And in a July post I explained why “Private, Nonprofit Health Insurance Co-Ops Cannot Adequately Reform Our Health Care System [4]”.

Today, Senator Rockefeller released [5] information his staff has gathered on co-ops, demonstrating why they should not be considered a solution to our health care crisis:

“The proposed co-op model is untested and unsubstantiated — and should not be considered as a national model for health insurance. Both the USDA and the GAO agree there is not sufficient analysis and data for health care co-ops, and the National Cooperative Business Association — the leading association for co-ops nationwide — believes that more research must be done before such a plan can be considered.

“The consumer health insurance cooperatives identified by the USDA and NCBA operate and function just like private health insurance companies. There is no evidence that co-ops would bring costs down or make insurance more affordable.

“I have said all along that we need a public plan option in health care reform to drive down the insurance costs that are pummeling working families. I urge my colleagues to seriously consider this troubling new information before hanging their hats — and most importantly the livelihoods of millions of Americans — on an untested concept. We can do better.”

Armed with that information, Senator Rockefeller sent a letter [6] to Senator Baucus, Chairman of the Senate Finance Committee, and Senator Grassley, the Committee’s Ranking Member, expressing his concerns about the co-op proposal included in the Finance Committee’s health reform package:

“It is my understanding that the Chairman’s health reform proposal contains a provision to expand consumer health insurance cooperatives (co-ops) as an alternative to a strong public health insurance plan option. As I have stated many times, I believe the inclusion of a strong public plan option in health reform legislation is a must – it is the only proven way to guarantee that all consumers can purchase affordable, meaningful, and accountable health insurance. I also believe a public health insurance option is the only way to bring true price competition to the health care marketplace...

“First, there has been no significant research into consumer co-ops as a model for the broad expansion of health insurance. What we do know, however, is that this model was tried in the early part of the 20th century and largely failed. As the USDA states in its response letter, ‘Government support for the cooperative approach to delivering universal health care was reduced during [World War II] and terminated afterward.’ This is a dying business model for health insurance. Moving forward with health insurance cooperatives would expose Americans, who are hoping for a better health care system, to a health care model that has already been tried and largely failed in the vast majority of the country.

“Second, there is a lack of consistent data about the total number of consumer health insurance cooperatives in existence today, and there have been no analyses of the impact of existing health insurance cooperatives on consumers...

“Third, all of the consumer health insurance cooperatives identified by the USDA and NCBA operate and function just like private health insurance companies. Therefore, it is unclear how expanding consumer health insurance cooperatives would actually achieve greater affordability for consumers or bring about greater competition in the private market...

Given such strong concerns, it is not surprising that Senator Rockefeller is adamant that he will not vote [7] for the Senate Finance Committee’s health reform package in its current form. We can only hope more senators will stand with the American people and with Senator Rockefeller in opposition to co-ops and in support of a public health insurance plan option [8].