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Co-op Confusion – Pacific Research Institute

Co-op Confusion

Not that there’s anything theoretically wrong with the co-operative in Green Bay, which required state legislation to enable the corporate structure. But why did it need a federal hand-out from day one? If group co-ops are the “natural” form of pooling risk or leveraging purchasing power, why did they not explode after Group Health Cooperative of Puget Sound (which is generally praised as a high-performing system) was formed in 1947?

Mr. Salam asserts that we don’t have enough non-profit insurers. In fact, we have many, but they’re not co-operatives. In California, Kaiser Permanente still dominates. Most economists would tend to disagree with Mr. Salam’s assertion, noting that the rise in health costs over the last 20 or so years meant that health insurers needed access to capital markets to keep solvent, although executives’ personal financial motivations were certainly also a factor.

But so what? Recent research on conversions of non-profit health plans to for-profit status concludes that the for-profit plans did a better job of holding down costs.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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