Wednesday, September 9, 2009

Sen. Max Baucus Calls For 50+ Health Insurance Co-Ops

Senate Finance Committee Chairman Max Baucus (D-Mont.) on Tuesday unveiled his "compromise" blueprint for healthcare reform, proposing new taxes on high-end insurance plans and offering fifty or more separate non-profit state level insurance cooperatives as an alternative to a national health insurance option. (A health coop is in reality an insurance company owned by the policy holders.) [LATimes - Raw Story]

The Baucus version of health insurance reform would provide federal funds to help set up nonprofit, state-level cooperatives in which consumers would would have the option to purchase health insurance.

Just as auto coverage is now mandatory in nearly all states, Baucus would mandate that all Americans get health insurance either through a private insurer or their local state cooperative. Penalties for failing to buy health insurance would start at $750 a year for individuals and $1,500 for families. Households making more than three times the federal poverty level — about $66,000 for a family of four — would face the maximum fines. For families, it would be $3,800, and for individuals, $950.

The Baucus plan would require insurers to take all applicants, regardless of age or health. But smokers could be charged higher premiums. And 60-year-old people could be charged five times as much for a policy as 20-year-olds. Baucus' co-op plan would not drive down health insurance costs and would do little to insure the 48 million people now without health coverage, but the mandate penalties would drive many into the waiting arms of private health insurers. (see: Insurance Industry Pushing For "Private, For Profit" Insurance Mandate In Reform)

Many doubt that replacing a national public health insurance option with fifty smaller and unassociated state health insurance co-ops is a good idea.

Robert Reich: Co-ops are a "bamboozle" that "won't have any real bargaining leverage."
Former Clinton Labor Secretary Robert Reich described Sen. Kent Conrad's (D-ND) reported cooperative health insurance proposal as a "bamboozle" and said that "nonprofit health-care cooperatives won't have any real bargaining leverage to get lower prices because they'll be too small and too numerous. Pharma and Insurance know they can roll them. That's why the Conrad compromise is getting a good reception from across the aisle." [The American Prospect, 6/11/09]
Krugman: The "supposed alternative, nonprofit co-ops, is a sham."
In his August 20 New York Times column, Nobel Prize-winning economist Paul Krugman wrote: "And let's be clear: the supposed alternative, nonprofit co-ops, is a sham. That's not just my opinion; it's what the market says: stocks of health insurance companies soared on news that the Gang of Six senators trying to negotiate a bipartisan approach to health reform were dropping the public plan. Clearly, investors believe that co-ops would offer little real competition to private insurers." [New York Times, 8/20/09]
Jacob Hacker: Co-ops are "not going to have the ability to be a cost-control backstop."
In a June 14 post to The New Republic's blog The Treatment, University of California-Berkeley professor Jacob Hacker argued that Conrad "has offered no reason to think that the cooperatives he envisions could do any of the crucial things that a competing public plan must do." Hacker continued:
An easy way to think of the public plan's functions is the three "B"s: We need a national public plan that is available on similar terms in all parts of the nation as a backup. This plan has to have the ability to improve the quality and efficiency of care to act as a benchmark for private insurance. And it has to be able to challenge provider consolidation that has driven up prices to serve as a cost-control backstop.

Cooperatives might be able to provide some backup in some parts of the nation, but they are not going to have the ability to be a cost-control backstop, much less a benchmark for private plans, because they are not going to have the reach or authority to implement innovative delivery and payment reforms. And so Conrad's idea appears to be yet another compromised compromise that cuts the heart out the idea of public plan choice on the alter of political expediency. [...]
A national cooperative would still fall so dramatically short of a public plan that it would only be attractive in addition to a national public plan, not as a substitute for it. Indeed, this point holds more generally. Given the need for countervailing power in the health care market, the federal government should encourage a range of consumer-oriented health plans and state-based public plan options, so long as there is also a national public plan capable of being a backup, benchmark, and backstop. [The New Republic, 8/14/09]
Baucus and his staff forgot to delete the name of the author of the Finance Committee's health plan from the Acrobat version of the document.

In the Properties dialogue box of the PDF, in the "author" slot, the name Liz Fowler appears. Fowler is a Baucus staffer who was with the senator in the early part of this decade but left to take a breather in the private sector and only returned to Capitol Hill last year. During her time in the private sector, can you guess where Fowler worked?

She was the VP for Public Policy and External Affairs at WellPoint, the health insurance parent company of Blue Cross.

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