The trade group for the new nonprofit, member-owned health insurers that the Patient Protection and Affordable Care Act (PPACA) is supposed to be creating are pleading for funding help.
The National Alliance of State Health CO-OPs has written to U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius to ask her to try to restore the CO-OP establishment loan program provided PPACA.
The drafters of Section 644 of the American Taxpayer Relief Act of 2012 – the fiscal cliff act — wiped out 90 percent of the $2 billion in PPACA Consumer Operated and Oriented Plan loan program funding that has not already been allocated.
If the decision stands, then only the 24 organizations that already have HHS funding commitments will be able to use HHS money to start CO-OPs in their states.
Keeping Americans in the other 26 states from having their own, homegrown CO-OPs won't do much to help cut the deficit and will keep CO-OPs from increasing the level of competition in the health insurance market, the CO-OP group is telling Sebelius.
This whole situation makes my head spin causes me to need to have half a dozen arms to hold all of my many conflicting opinions.
On the one hand, I hate to see the world being mean to people, like CO-OP organizers, who are just trying to provide health insurance coverage for people within a framework set up by the government. No matter how much the Republicans want to clobber the Democrats, and vice versa, why should the government be able to dangle billions of dollars of loans in front of people to get them to devote years of their lives to getting the loans, then suddenly say, "Nyah nyah nyuh nyah nyah?" That's just plain mean.
And, just because of how my nervous system works, I hate things that start not to finish. I'm dying to know how PPACA and the exchanges and the CO-OPs and all the rest of it will work, no matter how well or poorly they work. It would drive me up a tree not see how they actually do in real life.
On the other hand, this whole mess is the kind of program that Sunforester, the champion of free-market principles in the LifeHealthPro.com reader comment system, can dance all over. There are plenty of private health insurers out there. There are even plenty of nonprofit health insurers out there, and quite a few member-owned mutual insurers. They might be fine health insurers, but Kaiser Permanente, for example, hasn't wiped out its competition in California.
For-profit health insurers that must serve the whimsical, short-term demands of Wall Street seem to be doing a good job of winning the hearts of both group plan sponsors and individual consumers.
Why should the government fund the startup of yet more health insurers, and how could anyone expect the whole system to be anything other than a complicated mess?
Adam Smith's invisible hands may something produce outcomes we dislike, but they do what they do in a pretty straightforward way. You don't need hundreds of pages of statutes and regulations for the free market to match supply with demand.
On the third hand, the whole reason folks like Max Baucus liked the CO-OP idea in the first place is that, in the real world, some state health insurance markets have little true competition, and advocates of the idea thought it was way, way nice and more free-market-oriented than adopting the kind of Canadian-style single-payer system that some Democrats in Congress were demanding.
My guess is that most of the folks who hate government help for CO-OPs would hate it even more if, instead of having CO-OP plans competing on state exchanges side by side with the for-profit plans of the world, Medicare simply covered all of us, from cradle to grave, without worrying about any of the "menu of plan options" business.
On the fourth hand: Even if the CO-OP loan cuts won't really amount to much, we've got to start cutting somewhere. The PPACA program rules make it almost impossible for ordinary suppliers of capital to invest in starting CO-OPs, but if the general idea of starting nonprofit, member-owned health insurance CO-OPs is actually a great idea, there's nothing but a little state insurance red tape to keep Google, Microsoft or Wal-Mart from starting nonprofit mutual health insurers outside the PPACA CO-OP framework. As far as I can tell, there's also nothing to keep successful, funded CO-OPs from extending their operations into states outside their states of domicile.
Finally, on the last hand: One good thing about this whole situation is that about half the states will have homegrown CO-OPs and about half won't, and the split has been shaped more by the fairly random factor of CO-OP paperwork completion speed rather than by the typical Red State-Blue State divide that has shaped many other PPACA implementation splits.
If the current funding situation persists, maybe it would be interesting to see what happens in the states that have CO-OPs and the states that don't.
If CO-OPs work great, then it seems logical to expect that, in a few years, consumers in the states without CO-OPs will demand CO-OPs and find a way to get them created, PPACA loan money or no PPACA loan money.
If the CO-OP initiative fizzles, then the CO-OP organizers will move on to the next hot thing, and Sunforester will have the satisfaction of seeing that everyone knows she's right when she informs them that she told them so.
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