Advantages and disadvantages of cooperatives

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What is a cooperative?Co-ops are member-owned businesses that are responsible to their voting members, rather than shareholders; they are publicly-traded companies. The chief booster of health care co-ops, Sen. Kent Conrad (D-N.D.) cites dairy food producer Land O'Lakes and Ace Hardware as examples.

What are the advantages?A health care co-op, in theory, would be driven not by profit but by the needs of its members, who would pay a fee to join. This is essentially how most credit unions operate: Members pay to join and the credit union aims to keep transaction fees lower than at a traditional bank.

What are the

disadvantages?Not all credit unions are a better deal than your local bank. The same would likely be true for a member-owned health care cooperative, according to Sen. Jay Rockefeller (D-W.Va.), who has released a series of letters about health care co-ops. Whether the cost structure for services would be worth the investment would depend on a variety of factors including regulation and management structure to the amount of risk individual co-ops were willing to accept. Neither the Obama administration nor national Democrats have provided such details.

What would it cost to join

a co-op?

That's unknown. It's possible the federal government would subsidize all or parts of uninsured people's membership fees, but such fees would not necessarily be less expensive than those that private insurance firms charge.

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With Reid J. Epstein

and wire service reports

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