Health insurance purchasing cooperatives.

S mall employers have particular disadvantages as purchasers of health insurance.They often are not well informed about the insurance options available to them because, unlike large employers, they do not have specialized staff to manage their employee benefit programs. Small business owners, who usually make decisions about insurance for their firms, typically have little time or expertise to bring to the task and often must rely on an agent’s advice. Even when small employers make informed choices, their health insurance premiums are likely to be substantially higher than what large employers pay for comparable coverage. One idea for overcoming these disadvantages continues to generate widespread interest—the health insurance purchasing cooperative. People attracted to the idea reason that small employers who join together to purchase health coverage collectively should be able to strike a better deal than they would by acting separately. Acting jointly, it seems that they should be able realize the advantages that large employers enjoy because of their size and bargaining power. If, by aggregating their purchasing power, small employers were able to buy coverage at lower cost, firms not previously offering health coverage might be encouraged to do so, thus reducing the numbers of uninsured.The collective purchasing idea appeals to people of divergent philosophical perspectives because putting it in place does not require major institutional changes or government regulation and does not seem to be very costly. The Commonwealth Fund is a private foundation supporting independent research on health and social issues.