Health Care Co-Ops: A Failing Experiment
Among the other provisions and new opportunities provided by the Affordable Care Act, health care cooperatives were an attempt to use customer ownership to lower health care costs much like how it’s managed the same for produce and banking. Unfortunately, thanks to a combination of inexperienced managers and an over-reliance on federal loans, it looks like health care co-ops will soon be nothing more than a historical blip.
A Decent Idea
The idea of a customer-owned cooperative is to squeeze the profit margin as thin as possible. While cooperatives aren’t exactly nonprofit organizations, the fact that there aren’t separate owners or stockholders means that all profits are transferred back to the customers.
Farming cooperatives are national businesses which manage, distribute, and market the products which its farmer owners produce. Farmer co-ops distribute their profits based on each farmer’s contribution, which means they’re nothing more than a way for individual farmers to take advantage of a centralized national infrastructure.
Banking co-ops, better known as credit unions, are just about the best option available when it comes to getting good interest rates for a loan or a savings account. Although unions have to limit their membership to a specific group, qualifying groups can include company employees, trade organizations, or even geographic regions, so it’s likely that there’s already a credit union you could join today.
A Poor Execution
Unfortunately, when it comes to health care, the hospitals, clinics, and pharmaceutical companies have more power over costs than the insurance companies. As such, health care co-ops couldn’t offer rates that were significantly lower than what traditional insurance companies provide, and those that did operated at a significant loss. It also didn’t help that the new companies didn’t have the collective bargaining power of their larger competitors, nor did most of them have experienced executives or actuaries who would be able to get realistic numbers that would allow them to balance their premiums against their claims.
Instead, these cooperatives used the federal loans included in the Affordable Care Act to keep their premiums low, and considering that premiums are their only real source of income, all but one health care cooperative was running in the red last year. Many have already declared bankruptcy, and it’s looking unlikely that this federal experiment will last much longer.
On the other hand, the USA Rx pharmacy discount card is showing no signs of slowing despite how we give our cards out for free. We aren’t an insurance company, and we don’t ask for any premiums: all we do is provide a discount on prescription medication which is accepted in every major pharmacy nationwide. If you want in, all you need to give us is a name and an email address, and if you want to know more you can call us at 888-277-3911 or drop us an email at [email protected].