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Cooperatives at center of health care debate
WASHINGTON (8/19/09)--Cooperatives have become a new buzzword as legislators consider proposals to reform the health care industry. The National Cooperative Business Association (NCBA) this week educated media about what a cooperative is and mentioned credit unions prominently as a good cooperative business model the government could follow. NCBA President/CEO Paul Hazen has been featured in BusinessWeek and The Washington Times, as well as WTOP-Radio; Channel 6 News in Tulsa, Okla.; WGN-Radio's "Greg Jarrett News Show" in Chicago and Christian Broadcasting Network's CBN News during the past two days. Adam Schwartz, NCBA vice president of public affairs and member services, was featured on Minnesota Public Radio. They discussed the proposal to use co-ops instead of a government-run insurance option as part of health care reform. The proposal, that cooperatives could serve as a model for health insurance cooperatives, was made by Sen. Kent Conrad (D-N.D.), whose state gets much of its electricity through utilities cooperatives. The proposal would cost about $6 billion in startup funding in the form of federal grants or loans. While the plan is appealing, since cooperatives are owned and run by their members, the public must first understand cooperatives more clearly before making a judgment, said Hazen. Unlike today's health insurance companies, cooperatives' purpose is to provide services to people, not to maximize profit, he said. Any health care reform needs to address fundamental issues such as the escalating cost of health care. More than 300 health care cooperatives already exist in parts of the country, including Arizona, California, Minnesota, Tennessee, and Washington state. But they don't underwrite and sell health insurance. They simply negotiate the rates on pre-existing plans with health insurance companies (Business Week Aug. 17). To operate as Conrad has proposed would mean the co-ops would need to enough members to reach scale so they could competitively negotiate directly with health care providers--doctors, hospitals and drug companies--Hazen told several of the media. Many cooperatives familiar to Americans are owned and run by farmers. The model closer to what the health insurance program would look like is a credit union, he told The Washington Times (Aug. 18) and CBN News. Co-ops work best when developed from the ground up, not the top down, he told the Times. A co-op's success should be judged over a 10- to 20-year period, not as a quick fix to the nation's health care problems. NCBA can't endorse or reject the proposal until it knows exactly how the insurance cooperatives will be set up and regulated, Hazen said. The key would be how the health co-ops would be organized. "We need more information. The public cannot meaningfully engage this debate unless the (Senate) Finance Committee releases more information," he said. NCBA says there are 29,284 cooperatives in the U.S. generating more than $652 billion in revenue, $75 billion in income and more than two million jobs. Cooperatives account for roughly 1% of the U.S. Gross Domestic Product ($154 billion of $14 trillion).
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