White Flag: White House Dropping 'Public Option'? Cooperatives May Be Next on Agenda

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Posted: Aug 16, 2009 5:19 PM
In a surprising, yet welcome turn of events, the White House signaled today that it may be bowing to growing opposition and abandoning its idea of providing a government-managed "public option" as part of its plans for health care reform.  AP is reporting:
Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority opposed by GOP lawmakers...

Health and Human Services Secretary Kathleen Sebelius said that government alternative to private health insurance is "not the essential element" of the administration's health care overhaul. The White House would be open to co-ops, she said, a sign that Democrats want a compromise so they can declare a victory.
Victory, sweet victory?  Well, maybe not quite.  If the administration is indeed reformulating its plan to overhaul America's health care with a new "co-op" system, what does this mean for Americans?  One proposal, authored by Democrat Sen. Kent Conrad (ND), would mean "consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own."

However, Conrad's plan is a far cry from Democrat Sen. Chuck Schumer's (NY) idea of an effective health care cooperative system.  Schumer's plan calls for a national co-op run by federal officials appointed by the president. 

Michael Tanner of the CATO Institute cautions that opponents of a government-run "public option" should not be fooled by this "compromise."  It's suggested that these co-ops would be nonprofits, but many insurers are already classified as "nonprofit" companies--including "mutual" insurance companies and groups like Blue Cross.  In addition, states already have the power to set up their own health care co-ops and a number already exist.  So, if the "new co-ops" are to operate under the same rules as other nonprofit insurers, why bother?

Supporters of government-run health care have no intention of letting the co-ops be independent enterprises. In fact, Sen. Charles Schumer (D-NY) makes it clear, for example, that the co-op’s officers and directors would be appointed by the president and Congress. He insists that there be a single national co-op. And Congress would set the rules under which it operates.  As Sen. Max Baucus (D-MT) says, “It’s got to be written in a way that accomplishes the objectives of a public option.”

If a “co-op” is run by the federal government under rules imposed by the federal government with funding provided by the federal government, that is government-run health insurance by another name.

So, can a so-called "co-op" plan work as a private entity in a private market, providing families with effective choice in their coverage?  The Heritage Foundation seems to think so, but stresses that they have to be executed correctly.  When examining any future policies coming out of Congress for a new health care "co-op" plan, here are Heritage's suggested principles that must be part of an effective private co-op model:

---Cooperatives must be voluntary, open to individuals who choose to freely join together without coercion or restraint, and controlled by its members, not the government;

---Cooperatives must be viable on their own and must not receive anti-competitive government support in any form including assumption of risk, "start-up" capital, or continuous subsidies to the organization--which would turn them into government-preferred public plans;

---Health plans must be selected only by a co-op's members, not the government;

---Competitiveness must be based on the member strength of the cooperatives and not on any favored status, including government subsidies, access to government pricing, coverage or coding decisions, or regulatory intervention;

---Any necessary regulation to keep a level playing field among health plans must be reserved for the states;

---State reforms should open doors to competition, including the competition that cooperatives would bring; and

---All individuals--including those who receive public subsidies and individuals eligible for Medicaid or SCHIP--should be free to join cooperatives of their choice.
As WH Press Secretary Robert Gibbs said today, "What I am saying is the bottom line for this for the president is, what we have to have is choice and competition in the insurance market."  If the Democrat-controlled Congress and the White House choose to go the route of health care co-ops to push a Dem victory in health care reform, they are going to be looking for the best ways to give consumers a choice in health care.  Under a truely consumer-based co-op, members would have a trusted partner to help them in securing private insurance coverage.  But if the plan fails to acknowledge the necessary private co-op principles above, we'll be looking at just another nightmare government program in which to continue our fight against.  Concessions in the ObamaCare plan aren't enough; we want surrender.