Co-ops. Workable?

by Tom aka Rusty Rustbelt

Co-ops. Workable?

The compromise to the “public plan,” as Robert points out in an earlier post, is the creation of co-ops (Robert wants to set up one giant co-op, which of course is his way of saying we should set up the “public option” whatever we call it).

But suppose the co-op option becomes law.

A co-op could serve as both the insurer and the provider. Not a new concept, but not a widely used management model. Most are small and local.

Or the co-op could be just the insurer, essentially a not-for-profit insurer, not a new concept.

Being a health care operations and finance guy, I sat down to design a few different co-ops (I am a planning and checklist freak, also a devotee of the Critical Path Method (CPM) for start-ups).

Hmmm, difficult.

The level of sophistication required to design and operate a real co-op is considerable. Keeping any co-op of size in financial balance would be incredibly difficult (any properly designed co-op would have to lay off catastrophic risk on those evil insurance companies).

Co-ops would have to hire sophisticated and experienced insurance and operations managers and install sophisticated information systems. These actions would be very expensive, and very complicated, especially in a quick start-up period.

Getting providers on board is another huge issue, whatever the co-op model might be.

Can this be done? Yes. Would this be easy? No way.

Now I think about designing a “public plan.” Not easy either.
by Tom aka Rusty Rustbelt