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Facts Everyone Should Know About Health Insurance Co-Ops

facts everyone should know about health insurance co-opsHealth insurance co-ops, short for cooperatives, have been popping up in the media since President Barack Obama announced his plan for massive healthcare reform sweeps throughout the country.

There is great debate surrounding the development of cooperative health insurance providers. Some believe that these co-ops represent a positive turning point in the health insurance industry.

Others suggest that co-ops will prove to be ineffective and powerless. The truth is likely somewhere in between.

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Upcoming Healthcare Reform and What It Means

Conversation about healthcare co-ops accelerated after the President’s healthcare reform bill was passed in Congress. This bill will require every citizen of the United States to secure some form of healthcare policy by the year 2014.

Any individual without a healthcare policy after that year will pay fines and penalty fees on his or her tax return.

A storm of controversy followed the passing of the President’s bill. Many critics wondered how low-income families were going to afford expensive health insurance. Some suggested the formulation of a government-funded insurance group. Others balked at the idea of the government controlling yet an another aspect of American life.

For-Profit, Public Healthcare Providers

everyone should know about health insurance co-ops

The vast majority of health insurance providers today are publicly owned, for-profit institutions. The characteristics of public healthcare companies include:

  • Stock options in the company
  • A for-profit mindset
  • Higher premiums to cover higher administrative costs
  • Attempted monopolization of the health insurance market

What’s wrong with a company trying to make money? Well, while free enterprise is encouraged in the US, there is a big problem with public healthcare providers: their insurance is very expensive. With the new healthcare reform bill approaching, many citizens are wondering how to make room in their budgets for the large healthcare premiums. Health insurance co-ops are, possibly, a unique solution.

The Cooperative Difference

So, what is a health insurance co-op? The biggest difference between co-ops and publicly owned health insurance providers involves who is actually running the insurance company. With a publicly owned company, the decisions regarding premium prices, services offered, hired medical staff, and even prescription medicines offered are made by a board of strangers. Customers have no say in the selection of the board or its decision-making processes.

A co-op is exactly the opposite. In a cooperative healthcare system, the board of directors is elected by the members. The board of directors also consists of members. This type of democratic healthcare system ensures that every member has a voice. Other characteristics include:

  • should know about health insurance co-opsNon-profit mindset that emphasizes low cost care
  • Lower administrative costs
  • The use of generic medicine and preventative medicine
  • Member-owned clinics and pharmacies
  • Member-selected coverage options
  • Familiar operating structure for citizens who participate in water co-ops or electrical co-ops
  • Improved home-based healthcare
  • Member support for non-profit hospitals within the community
  • Support for local pharmacists and locally-produced medication

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Ending Expensive Monopolies

Perhaps the greatest potential benefit from the introduction of health insurance co-ops throughout the country is the end of the dangerous monopolies that are threatening to make affordable health insurance beyond easy reach.

There is a lot of discussion regarding the large number of insurance providers in the US. Proponents of for-profit healthcare will say that there are over 1300 healthcare providers in existence, and that all these providers are competing. Competition usually precludes the development of monopolies.

facts people should know about health insurance co-ops

This data, however, is skewed. In states like Virginia and Tennessee, one or two health insurance companies control a vast majority of the state. Suggesting that healthcare companies are competing in a healthy way is like saying that tailor shops are competing. There may be 50,000 tailor shops in the nation, but if there is only one tailor shop within 100 miles of your home, then that is the tailor you will be visiting. That tailor could charge far more than his competitors, but you would have no other options. Such is the nature of health insurance monopolies.

Widespread, available health insurance co-ops could help to strengthen the competition with for-profit insurance companies.

Member Owned, Member Operated

Health insurance co-ops are organized, run, and managed by the members of the co-op. This means that board members are elected. Because these board members are also members of the co-op, and their families are the ones receiving the insurance benefits, other members can trust their decisions. Cooperative programs have worked well in other industries such as electricity, natural gas, and even dairy products.

Money Saving Techniques

heath insurance co-ops factsCooperative health insurance companies use new techniques to lower the premiums for their members. For example, many health insurance co-ops have deals with generic brand pharmaceuticals. Members of the co-op can receive these medications for a fraction of the cost of other prescriptions.

Large, profit-based health insurance companies often have arrangements with name brand drug companies. Consumers may end up spending a great deal more on medication with these companies.

Health Partners, based out of Minnesota, is one of the largest and most successful health insurance co-ops in the country. Health Partners has grown so much that it has incorporated its own medical facility into the co-op.

Member employed physicians, a cooperative pharmacy, and a medical clinic can all be found on-site. By creating its own medical facilities, Health Partners is able to drastically reduce premium costs for its members.

A Progressive Approach to Medicine

Many cooperative healthcare programs are introducing progressive forms of medicine. Preventative medicine, for example, is all about education rather than medication. In Minnesota and Wisconsin, members of the Health Partners co-op have been advised to quit smoking in order to reduce adverse health effects.

The rate of those who have successfully quit is more than double the state percentages. By emphasizing education and preventative medicine, members of cooperative healthcare programs will have fewer health-related problems as they age.

facts everyone should know regarding health insurance co-opsA profit-motivated healthcare company has no reason to promote healthy living and health education to its customers. Because this type of healthcare company makes money during a health crisis, prevention education is not a priority.

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Healthcare in the United States will dramatically change in the next few years. With discussions raging about the pros and cons of establishing a government-provided healthcare plan, many consumers are forgetting about the benefits of cooperative healthcare.

It is possible that this middle-of-the-road solution will prove to be the best. In fact, the government has already begun funding start up co-ops across the nation.

Sources

http://www.healthreform.gov
http://www.whitehouse.gov/healthreform
http://www.nytimes.com/2009/08/17/health/policy/17talkshows.html?_r=2&hp
http://www.ncba.coop/ncba/about-co-ops/co-op-sectors/146-healthcare

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