Summary: One of the few areas of widespread agreement in the health care debate is that small businesses and other small organizations have a tough time buying and keeping health insurance for their employees. Some small groups cannot obtain health insurance at any price because of the health status of just one of their workers. Even those able to secure coverage may face extremely high premiums. One response to this problem is to pool the buying power of individual small firms. Under insurance purchasing cooperatives, large numbers of relatively small organizations band together to reduce their administrative expenses, pool their insurance risk, and increase their clout to get a better deal. GAO believes that the criticism of coops as too regulatory and too bureaucratic has been overstated. Coops are a proven and economical way for firms to buy insurance. Coops generally operate with small staffs and have greater regulatory authority than many health reform proposals would allow. They rarely, however, administer subsidies for the poor or the unemployed, a key requirement under many health care reform bills. GAO suggests that more attention needs to be paid to several governance issues, including the composition of coops' governing boards, representational safeguards, and the potential for politicization of appointments. GAO summarized this report in testimony before Congress; see: Health Reform: Purchasing Cooperatives Have an Increasing Role in Providing Access to Insurance, by Mark V. Nadel, Associate Director for National and Public Health Issues, before the Subcommittee on Human Resources and Intergovernmental Relations, House Committee on Government Operations. GAO/T-HEHS-94-196, June 30, 1994 (13 pages).
