Access to Health Insurance:

Public and Private Employers' Experience With Purchasing Cooperatives

HEHS-94-142: Published: May 31, 1994. Publicly Released: Jun 14, 1994.

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Pursuant to a congressional request, GAO reviewed health insurance purchasing cooperatives, focusing on: (1) the various forms of existing cooperatives; and (2) how existing cooperatives' functions, organization, and governance relate to national reform proposals.

GAO found that: (1) health insurance purchasing cooperatives are becoming an important component of state health insurance reform; (2) existing and proposed cooperatives have core functions that include enrollment, premium collection, and contracting with health plans, but existing cooperatives also perform additional policy and management functions that proposed reforms would delegate to government entities; (3) public cooperatives generally offer a wide variety of plans, while private cooperatives limit the number of offered plans; (4) public cooperatives have begun to negotiate prices with providers to restrain premium increases as private cooperatives do; (5) existing cooperatives are not big bureaucracies and their operating costs range from 3 percent of premiums for small or new cooperatives to less than 1 percent for larger and more mature cooperatives; (6) most cooperatives contract for operational functions, while their in-house staff focus on policy and management functions; (7) subsidy administration will be required under health reform proposals, but only 2 of the cooperatives reviewed currently administer subsidies for low-income and unemployed persons or plan to do so; and (8) Florida's experience with regional purchasing cooperatives suggests that governance issues need more attention, particularly the composition of governing boards, representational safeguards, and the potential for politicization of appointments.

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