The talking heads have been opining that the idea of a public option in the healthcare reform legislation being considered may be a dead duckling. Many are now saying that some sort of "insurance co-op" might be an acceptable alternative from a political standpoint.

I've been in business a long time and I don't know exactly what is meant by an insurance co-op. The Wikipedia definition of a co-operative is...

A cooperative; often referred to as a co-op or coop) is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. It is a business organization owned and operated by a group of individuals for their mutual benefit. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it.

The idea of an insurance co-op raises a lot of questions in my mind, particularly when I read that the big insurance companies would favor a co-op over a government-owned insurance company. If those in the business for as profit are agreeable to this form of ownership for a new competitor, forgive me if I have some suspicion of self-dealing.

The questions I have regarding this alternative for providing a competitive option to the existing insurance companies includes at least the following few things we all ought to think about as our elected representatives begin to talk about an option that they're considering for the purpose of political self-preservation.

• If set up, will regulations be written that will dictate it's operation? Will the same regulations apply to the private insurance companies? Will such regulations be federal regulations or a series of 50+ individual state regulations?
• Where will the money come from to capitalize this new business? If it is successful, where will the money come from to finance it's growth?
• If the co-op will be owned by a group, who will be in that group? Will it be a group of private insurance companies? Will it be a group comprised of those insured by the co-op? Will the government have any role at all in the co-op ownership?
• If the co-op somehow finds itself in financial trouble, maybe even has to declare bankruptcy, what happens to their "owners" and their "insureds"?
• Will the co-op be split up into individual state enterprises and placed under the authority of the individual state insurance commissioners like other private insurance companies? Can the co-op split into 50 or so parts be financially successful on such a small scale?

Just a few things we ought to be thinking about as this national debate continues.

Originally Posted by Villages Kahuna

The talking heads have been opining that the idea of a public option in the healthcare reform legislation being considered may be a dead duckling. Many are now saying that some sort of "insurance co-op" might be an acceptable alternative from a political standpoint.

I've been in business a long time and I don't know exactly what is meant by an insurance co-op. The Wikipedia definition of a co-operative is...

A cooperative; often referred to as a co-op or coop) is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. It is a business organization owned and operated by a group of individuals for their mutual benefit. A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it.

The idea of an insurance co-op raises a lot of questions in my mind, particularly when I read that the big insurance companies would favor a co-op over a government-owned insurance company. If those in the business for as profit are agreeable to this form of ownership for a new competitor, forgive me if I have some suspicion of self-dealing.

The questions I have regarding this alternative for providing a competitive option to the existing insurance companies includes at least the following few things we all ought to think about as our elected representatives begin to talk about an option that they're considering for the purpose of political self-preservation.

• If set up, will regulations be written that will dictate it's operation? Will the same regulations apply to the private insurance companies? Will such regulations be federal regulations or a series of 50+ individual state regulations?
• Where will the money come from to capitalize this new business? If it is successful, where will the money come from to finance it's growth?
• If the co-op will be owned by a group, who will be in that group? Will it be a group of private insurance companies? Will it be a group comprised of those insured by the co-op? Will the government have any role at all in the co-op ownership?
• If the co-op somehow finds itself in financial trouble, maybe even has to declare bankruptcy, what happens to their "owners" and their "insureds"?
• Will the co-op be split up into individual state enterprises and placed under the authority of the individual state insurance commissioners like other private insurance companies? Can the co-op split into 50 or so parts be financially successful on such a small scale?

Just a few things we ought to be thinking about as this national debate continues.

All good questions.

Sounds like a reinsurance pool to me, similar to how Lloyd's of London operates. It is a curious proposal.

The fact that a pool operates nationally (or internationally) doesn't mean it can't tailor activities to meet the needs of different customers (e.g., states or nations). That's the sign of a good business, rather than one so lock-stepped it becomes obsolete after a while.

I don't consider anything at the state level as "small scale." Several US states are larger than most countries in Europe, and every state can match up size-wise to at least one European nation. Also, state level operations allow for experimentation for better solutions.

I wonder if this is an effort to make "association plans" legal. In NYS you cannot band a bunch of small bunisses together to puchase health insurance. For instance I was once interested in banding a group of physician practices together to be big enough to self insure. I found out this was illegal. Thank you Blue Cross Blue Shield.