At the outset of the debate over health insurance reform, two goals were established: expanding coverage and controlling costs. The recently enacted legislation expanded coverage significantly, but did little to accomplish meaningful reductions in the cost of heath care. This is a problem that we, the people, can fix without any help from the government.
Forming health insurance cooperatives is the key to achieving a dramatic reduction in the cost of health care, without sacrificing the quality or quantity of care. During the period when a public option was being stripped from the legislation, one alternative proposed by opponents of a government-run plan was health care cooperatives formed by groups of private individuals.
I suspected at the time that private health insurance companies and their lap-dogs in Congress were confident that health care cooperatives would not materialize, or that if they were formed, they would not succeed. The American people stand to save a lot of money if their confidence proves to be misplaced.
Health care costs are presently consuming approximately 16% of our GDP and the percentage is steadily rising. All of the other major industrialized countries are spending 9% to 10% of their respective GDPs. Nearly all of the difference between our costs and other advanced countries is attributable to the involvement of private, for-profit health insurance companies. Administrative costs for Medicare add 3% to the cost of the care provided. Administrative costs and profits at private health insurance companies add about 30% on average.
Do the math. If we eliminate the middlemen (private health insurance companies) we can reduce the cost of health care by roughly 27%. That would reduce the percentage of our GDP devoted to health care to somewhere around 11%.
The inclusion of a public option was favored primarily by progressives. The mandate to purchase health insurance from private companies has been taking fire from the tea-party people and other advocates of limited government who are justifiably concerned about a law that forces people to purchase insurance from private companies.
What we have here is a clear opportunity for both wings of the bird to work together the way wings are supposed to work. We can improve the flawed legislation passed by Congress and make it fly right.
Both tea partiers and progressive organizations have demonstrated the ability to organize large numbers of people. Progressives organizations, such as Move On and Health Care for America Now, should utilize their cumulative (and sizeable) organizing abilities to spearhead a movement to form a health insurance cooperative.
During the debate over health insurance reform, Health Care for America Now created a list of principles for “Comprehensive Health Care Reform.” (They are listed on the organization’s web site (www.healthcareforamericanow.org). The second principle listed is:
“A choice of a private insurance plan, including keeping the insurance you have if you like it, or a public health insurance plan that guarantees affordable coverage without a private insurer middleman.”
Health Care for America Now is among the progressive organizations that have cheered the passage of health insurance reform, having accepted the reality that, even with its flaws, the new system will be an improvement over the previous, even more deeply flawed system. There is something to be said for that point of view, but if we succeed in forming not-for-profit health insurance cooperatives, we can achieve a much more dramatic reform.
To keep health insurance as affordable as possible, a health care cooperative should work the way insurance is supposed to work — covering only major medical events. Since the plan would need to be self-funded, there is an inverse relationship between premiums and deductibles. The higher the deductible amount, the lower the premiums and vice versa. Keeping premiums low and the deductible relatively high would reduce the cost of health care significantly by doing away with any middleman in most doctor-patient interactions.
A separate type of cooperative (or plan) could also be offered with higher premiums and a very low (or no) deductible. Such a plan, modeled closely on the “Medicare-For-All” model that many progressives favored, would cover most, if not all, medical expenses. Such a plan could more accurately be described as a health care cooperative. (As opposed to a health insurance cooperative.) If such a cooperative was managed as efficiently as Medicare, it would also be an improvement.
Establishing not-for-profit health care cooperatives can be done under existing laws. We don’t need a super-majority in the Senate. We don’t even need Congressional approval. Can we do it? Yes we can
Angry tea-partiers and disappointed liberals unite We have nothing to lose but higher health care costs. We have a much-improved health insurance system to win.