Co-ops offer compromise, but could take decades to develop

"A network of health insurance plans run by the customers they serve, proposed in the U.S. Congress to offset opposition to a government-run system, may take a generation to pay off, even with $10 billion in seed money," Bloomberg reports.

The co-ops, according to Sen. Kent Conrad, D-N.D., who first floated the idea last month could lower costs, cover more Americans, and gain bipartisan support. President Obama said in late June that he was "open" to the idea.

However, based on the experience of existing co-ops, the plan could take decades to develop into an effective mechanism for achieving those broad goals. "If we had 25 years, and we weren't staring down the barrel of a shotgun on health costs, it's a pretty neat concept," Paul Keckley, of the Deloitte Center for Health Solutions, told Bloomberg.

Bloomberg reports: "Conrad would give the co-ops at least $10 billion in seed funding, said New York Senator Charles Schumer, the chamber's third-ranking Democrat, in an interview last week. Christopher Thorne, a Conrad spokesman, didn't immediately return e-mails over the weekend asking about the funding."

Washington State's insurance commissioner, Michael Kreidler, praised Washington's existing co-op, Group Health Cooperative, a 600,000 member plan that employs 922 doctors and 1,700 nurses, but noted that it took 60 years to develop, the paper says, adding: "While Group Health's premiums are generally no cheaper than competitors', the plan has been less aggressive than private companies at trying to purge sicker, costlier patients."

Conrad, meanwhile, points to success stories in other industries. Ace Hardware, and Land O'Lakes, a dairy company with $12 billion in sales last year, are both co-ops (Nussbaum, 7/6).