Thursday, November 05, 2015

Co-op out

I am amused that, after about 5 years of writing endlessly about the ACA, right blogistan has just discovered co-ops. In fact, all of a sudden, they are a "key piece" of the law!

The problem is: that's not really true. ObamaCare has plenty of "key pieces." The three major pillars of the law are: (1) expanding medicaid, (2) creating the exchange for sale of individual policies, and (3) revamping of the rules governing employer-provided policies.

Co-ops aren't any part of that and the law can function fine without them. Rather, co-ops are one of several add-ons that were put into the law as experiments about controlling health insurance costs. The idea was that a non-profit insurance company might be able to deliver health insurance at less of a cost than the incumbent for-profit companies. No one knew whether non-profit co-op insurance carriers would work because they hadn't really been tried. So the law included a provision which allowed the co-ops to form to see if they could find a place in the insurance market and then so that we could see how they did against other insurance carriers. It turns out they didn't work. Or at least the version authorized by the ACA has not worked. The co-ops never caught on and are mostly going out of business.

What does that mean for the larger ACA scheme of reforming the health insurance system to reach near-universal coverage? Nothing really. Just because one of the cost-containment experiments didn't pan out doesn't mean anything about the success or failure of medicaid expansion, the exchanges, or current regulation of for-profit insurance companies. The only reason the right insists that co-ops are central is because they are clearly failing. If they were really so central, we would have heard a lot more about them before now.