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Co-Ops are “destined to fail” |
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Carl McDonald and James Naklicki at Oppenheimer’s Equity Research department, which “consists of over 100 research professionals who cover over 700 companies in eight sectors,” and is a well-respected research source both on and off Wall Street has this to say about the co-op proposal circulating in Washington [pdf]:
As the co-ops are currently described, we think they would be a big positive for the managed care group, but it seems to us that they would be destined to fail from the moment of creation. But because that seems so obvious, if the health co-ops do make it into the final Senate Finance Committee bill, there would likely have to be some pretty significant adjustments to the concept to give them any chance of success.
I’d agree. As pointed out on Friday, co-ops cannot not accomplish the goals of a public health insurance option (and health reform in general) as laid out by President Obama - which is primarily lowering costs and keeping the insurance industry honest - because they will not have the clout to compete with the industry. I mean, really, do you expect small, regional co-ops would be able to reform the system? I don’t think so, and neither does Oppenheimer’s researchers, who study the health care market everyday. Co-ops would compete so poorly, in fact, that they may fail.
Again, the public health insurance option is needed to control costs and keep the insurance industry honest. To accomplish that goal, a public health insurance option must meet a few principles:
- National and available everywhere: A strong public health insurance option will be a national public health insurance program, available in all areas of the country. The insurance industry is made of of conglomerates that have national reach. In order to have the clout to compete with the insurance industry and keep them honest, the public health insurance option must be national as well.
- Government appointed and accountable: The entire problem with private health insurance is that they aren’t accountable to you or me. A public health insurance option must have a different incentive. A public health insurance option doesn’t have to be a government entity necessarily, but its decision makers must be appointed by government and must be accountable to government.
- Bargaining clout: The whole point of health reform is to lower health care costs. Clearly, the insurance industry has failed to lower costs when left to their own devices. As the President says, we need a strong public health insurance option to lower rates, change the incentives in our health care system, and keep the industry honest.
- Ready on day one: The private health insurance industry has utterly failed to control health care costs or provide their customers the quality they’ve paid through the nose for. With one person going bankrupt every 30 seconds due to health care costs, we cannot afford to wait any longer for a real fix. We need the public health insurance option to start lowering prices now. That means no trigger.
It doesn’t matter what you call the public health insurance option, but if the proposal does not meet these principles, it is not going to control costs or keep the industry honest, and therefore it is not a public health insurance option.
The co-op proposal fails to meet these principles. It is not a public health insurance option.
(also posted at the NOW! blog)
