Monday, August 17, 2009

Compromise Co-Op Proposal Won't Lower Costs, Government Study Showed

The U.S. General Accounting Office produced a report on cooperatives in March 2000 that was mostly sour on the idea. Using five different co-ops as examples, the study concluded that on the key function -- lowering the cost of insurance -- these non-profit insurance pools came up well short.

"The cooperatives' potential to reduce overall premiums is limited because
(1) they lack sufficient leverage as a result of their limited market share;
(2) the cooperatives have not been able to produce administrative cost savings for insurers; or
(3) their state laws and regulations already restrict to differing degrees the amount insurers can vary the premiums charged different groups purchasing the same health plan."

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