Could Missouri Be Helped with a Health Care Co-Op?

During the current health care debate, there has been a great deal of discussion about an option for a national, public health care plan. Several of my friends have expressed some dismay about what its effect might be. A counterargument that has been used is that in America everyone needs some sort of health care insurance. Those without health care insurance harm their fellow citizens, because their failure to act places others at risk. In this country, people generally do not turn their backs to the unfortunate, so we all end up having to chip in to care for those without insurance.

A few weeks ago, the Show-Me Institute published a study by Arduin, Laffer & Moore Econometrics, “The Prognosis for National Health Insurance: A Missouri Perspective.” It is a thoughtful piece — 44 pages filled with important information. One of its foremost concepts deals with the “health care wedge.” In simple economic terms, the wedge is what separates the health care demander (patient) from the health care supplier (provider). In the past, this wedge was driven by insurance companies, and now the wedge is being driven forward by the government. As a result, neither the product end users (patients), nor the product suppliers (providers), have a good understanding of the costs. It is as though there is a third party present when doctor and patient meet. That third party happens to be the one that pays the bills, and that could be an insurance company or Uncle Sam. For a concise review of this problem’s history, see Milton Friedman’s 2001 summary.

One approach to correcting this has been suggested in the past: the concept of health savings accounts (HSAs). HSAs are a type of consumer-driven health care funding mechanism that allows the patient to be much more involved in making health care decisions. Owners of such accounts must spend their own money, which they have accumulated in a pre-tax account, so their health care spending is characterized by frugal caution.

The problem is that HSAs require their owners to acquire and maintain a high level of health care knowledge and sophistication. Most people with HSAs search the Internet to analyze their problems, and arrive at their doctor’s office with a printout of therapeutic choices. In many cases, the doctor visits are designed to add another level of expert knowledge to that already possessed by the patient. In the modern world of Internet access, everyone ought to try to do that — after all, what can be more important than taking care of your own health? The problem is that many people do not have the time, inclination, or ability to pursue this type of self-informed care.

There is another way, a concept called a health care co-op. These types of cooperatives are health care plans in which the purchasers (the patients) are the owners. The organizations are self-governed, and the members elect the board to oversee the health plan management. In this manner, the co-op reduces the wedge mentioned earlier. Because the participating patients are the co-op owners, they have a better understanding of what is being spent. In such a situation, the co-op itself acts as the insurer for its members. Then, when the doctor and patient meet, there is no third party, because the patient is a co-owner of the insurance company.

Missouri has a long history of successful cooperative enterprises. There are, and have been, multiple rural cooperatives to help farmers market and distribute their produce. At present, the Missouri Electrical Cooperatives are the most well known, because they have earned nationwide respect for their community work. Similar organizations have been an important part of our state’s development, and some of this has been coordinated by the Missouri Institute of Cooperatives.

It may be time for residents of this state to think of utilizing a Missouri Health Care Cooperative. As indicated in the past, more than 245,000 Missourians without health care insurance have incomes greater than 200 percent above the federal poverty level. Rather than asking people to buy health care insurance, maybe those that can afford it should be invited to invest in a Missouri Health Care Cooperative. Then, not only would those purchasers have health care insurance, they would also share in the profit made by their insurer.