Thursday, June 11, 2009

Max & Kent's Cool Bait & Switch Co-op

Senators Max Baucus and Kent Conrad offered an insurance co-op in place of a government provided health plan. The co-ops would be created in markets to compete with private health insurance plans. Co-ops would be owned by members.

New co-ops would have significant start up costs, including capital reserves. Would new members get assigned a start up fee? This question is relevant as reform has been charged with paying for itself.

I thought government provided important services the private sector couldn't. Why the shift to nonprofit insurers? Private health insurance includes nonprofit variations like Kaiser Permanente and some Blue Cross/Blue Shield plans. They failed to cover an estimated 50 million people. Why will they do better now?

Is Max trying to make room for WellPoint, a for-profit, publicly traded company to get in the back door through its licensed Blue Cross/Blue Shield plans. Their annual report stated:

We are the largest health benefits company in terms of medical membership in the United States, serving 35.0 million medical members as of December 31, 2008. We are an independent licensee of the Blue Cross and Blue Shield Association, or BCBSA, an association of independent health benefit plans. We serve our members as the Blue Cross licensee for California and as the Blue Cross and Blue Shield, or BCBS, licensee for: Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (as BCBS in 10 New York city metropolitan and surrounding counties, and as Blue Cross or BCBS in selected upstate counties only), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), and Wisconsin. In a majority of these service areas we do business as Anthem Blue Cross, Anthem Blue Cross Blue Shield or Empire Blue Cross Blue Shield (in our New York service areas). We also serve our members throughout the country as UniCare. We are licensed to conduct insurance operations in all 50 states through our subsidiaries.

Funny, Senator Evan Bayh's wife Susan is on the Board of WellPoint. So is President Bush's Uncle, William H.T. "Bucky" Bush. That sounds like bipartisanship in our corporate sponsored Congress.

Could the co-op could be a for-profit health insurance company which licenses a name? If not, the "solution" is new co-ops saddled with high start up costs. They'll need to hire a third party administrator, often a for-profit health insurance company. What are the odds a co-op will get a fair TPA bid from their competitor?

Vote out every incumbent in 2010, but especially Max Baucus, Kent Conrad and Evan Bayh.

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