CBO: Co-ops ‘Unlikely’ to Be Effective

October 07, 2009 | Last updated: July 31, 2020

To the dismay of many liberal lawmakers, the Senate Finance Committee famously excluded a public option from its health reform bill, instead proposing the creation of state-based health care cooperatives in hopes of bringing insurance costs down.

For the second time, the Congressional Budget Office has determined that those co-ops simply won’t have the bulk to compete with private insurers in most regions.

The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments. As a result, CBO estimates that of the $6 billion in federal funds that would be made available, about $3 billion would be spent over the 2010–2019 period.

That won’t make Sen. Kent Conrad (D-N.D.) happy, but it certainly lends force to those pushing the creation of a public plan.

h/t: Marc Ambinder