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Health cooperatives can’t replace public option

Consumer health cooperatives “are not yet ready for prime time” and “are certainly not a substitute for a public option” in health reform, Yale professor Jacob Hacker said in a teleconference for reporters in a conference organized by Campaign for America’s Future, a left-leaning Washington, DC, political group advocating social reforms, including healthcare policy change such as universal coverage.

“Are cooperatives going to be effective in taking on these gigantic insurance companies? From everything I know from people who represent them, the answer is a flat no. Cooperatives, even if they’re established after a lengthy period of development, would be small and scattered and lack the means to restrain cost increases or implement delivery of payment reform on a broad scale,” said Hacker, who is one of the leading proponents of the public insurance option.

And if the Senate Finance Committee endorses federally promoted health cooperatives, they should be understood for what they are: an effort to kill the public plan, and with it the prospects for a competitor to take on private insurance companies, he said. Hacker joined U.S. Sen. Sherrod Brown (D-OH), a member of the Senate Committee on Health Education, Labor, and Pensions, who decried efforts by special interest groups to undermine a public plan and several key provisions in health reform legislation by spreading rumors.

He spoke against what he called a “misinformation campaign” being circulated at town halls and other forums that President Obama isn’t a U.S. citizen, that health reform would constitute euthanasia of older, sicker Americans, and that the effort would amount to socialized medicine and a government takeover.

Brown, without directly accusing special interest groups of spreading those rumors, said in a response to a reporter’s question that Pharma, America’s Health Insurance Plans, and the American Hospital Association are special interests that are trying to defeat the bill.

“I appreciate that they have come to the table. I also know what they’re doing, what drug companies are doing on biologics, and what the health insurance industry is doing, trying to get a weak public option or no public option at all to basically decimate the public option,” Brown said.

“These interest groups are out there, as of course they would be, and they’re spending—the statistics I’ve seen are $1.4 million a day, not just from drug or insurance companies, but they’re the main part of that. Don’t think these interests groups aren’t out there, fighting every day out there ... to keep their share and enlarge their share of the public healthcare dollar in this country.

“And they’re a big reason this is so difficult ... because there’s so much money at stake. The insurance companies and drug companies, if they always have their way with Republicans, I want to make sure that they’re less likely to have their way with progressive democratic majority and the progressive Democratic president,” Brown added.

Hacker said he was strongly opposed to the idea being floated by members of the Senate Finance Committee that a health cooperative might be a suitable substitute for a public option.

Brown said cooperatives aren’t a serious means of achieving the following three essential goals that a public plan is far more likely to accomplish:

  • Providing a benchmark for cost and quality for private insurance
  • Offering backup financial health security for those without workplace coverage and small employers without access to good group health options
  • Creating a backstop to reduce spending through innovations in payment and delivery of care

“[Cooperatives] might be able to provide some backup in some parts of the nation,” Hacker said, “but ... they’re not going to have the reach or authority to implement innovative delivery and payment reforms in increasingly consolidated insurance and provider markets.”