Scattered Clouds 39° Good Afternoon
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Advantages and disadvantages of cooperatives

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.

With Reid J. Epstein

and wire service reports

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