So I found a solution and it seems like there is unexpected behavior from nginx. proxy_hide_header Set-Cookie does not seem to work when the location block is set to /

So:

location / {
#Lots of other proxy stuff here......
proxy_hide_header "Set-Cookie"; }

does not allow a cookie to ever be set, but:

location ~home.html {
#Lots of other proxy stuff here......
proxy_hide_header "Set-Cookie"; }

will allow cache HITS but won't cache Set-Cookie headers. Clients are still able to get the cookies from the back end and will never get another users session cookies.