Conrad’s Blue Cross/Blue Shield Wants to Be Your Local Monopoly Co-op

Ever since Sen. Kent Conrad started pushing member-owned co-ops as a substitute for a public option, we've needed to know how the co-ops could possibly perform the functions intended for the public option. How could a Conrad Co-op function effectively (and be governed) at a national level and how could it provide a meaningful alternative to today's mega insurance companies, forcing them to lower rates, stop screwing people or lose market share?

Now that the White House has deliberately elevated co-ops, while lying about it, it has finally occurred to the New York Times that perhaps we need some answers. Unfortunately, the Times article by Robert Pear and Gardiner Harris can't answer key questions because "the co-op idea is so ill defined that no one knows exactly what it would look like or how effectively it would compete with commercial insurers," but it does suggest that we can't expect any meaningful competition from co-ops for a long time, if ever:

As the debate rages, lawmakers are learning that creating cooperatives — loosely defined as private, nonprofit, consumer-owned providers of health care, much like the co-ops that offer telephone, electric and other utility service in rural areas — will not be easy.

The history of health insurance in the United States is full of largely unsuccessful efforts to introduce new models of insurance that would lower costs. And the health insurance markets of many states suggest that any new entrant would face many difficulties in getting established.

More important, the article reveals why Senator Conrad and others are pushing the idea so hard.

Mr. Conrad’s own state demonstrates the uncertainties surrounding cooperatives. Blue Cross Blue Shield of North Dakota dominates the state’s private insurance market, collecting nearly 90 percent of premiums. As a nonprofit owned by its members, the company would hope to qualify as a co-op under federal legislation, said Paul von Ebers, its incoming president and chief executive. . . .

Any new insurer in North Dakota would probably try to take members from the local Blue Cross plan, but that would not be easy to do.

So, BCBS controls 90 percent of the market, and it wants to be the exclusive not-public-plan Conrad Co-op to provide an alternative to . . . itself.
Why would BCBS bother to compete against itself? Because if you qualify to be the "reform" Conrad co-op, you're automatically eligible for the exchange, you get start-up funding (and no other competitor does), and any insurance plan in the exchange gets a share of the business ginnned up by the individual/employer mandates, and it is entitled to receive federal subsidies to help people pay whatever premiums the 90-percent dominant monopoly charges. It's a terrific scam that only a monopolist could love.

What about Sen. Chuck Grassley's Iowa?

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