Last week, Sen. Kent Conrad (D-ND) floated a health care proposal intended to mollify conservatives who are upset over the possible creation of a public health insurance plan. Instead of offering consumers a government-run option similar to Medicare, Conrad suggests giving individuals and very small businesses the option to buy into a plan that would be run by a non-profit cooperative. The idea has gained the support of Democratic senators, including Max Baucus (D-MT).
The idea would be to create multiple state or regional non-profit co-operatives, operating through members who choose a board of directors and a CEO. Unlike Medicare, this model “would lack the market leverage to bargain for lower prices.”
This morning on MSNBC, former Gov. Howard Dean rejected Conrad’s proposal, saying it is “not a real compromise.” “This is a fix for the Senate problem,” he said, “this doesn’t fix the American problem.” After heaping praise on Conrad, Dean explained:
He’s wrong about this. The co-ops are too small to compete with the big, private insurance companies. They will kill the co-ops completely by undercutting them, using their financial clout to do it. In the small states like mine and like Senator Conrad’s, you’re never gonna get to the 500,000 number signed up in the co-op that you need to in order for them to have any marketing [power].
This is a compromise designed to deal with problems in the Senate. But it doesn’t deal with problems in America. And I think it’s time for the Senate to stop playing politics, do what has to be done. … If the Republicans don’t want to get on board, then we can do this without the Republicans.
The Wonk Room’s Igor Volsky also notes that Conrad’s co-op proposal will lack the inherent advantages of a new public option. “Thus, co-ops should be considered as a supplement to — not a replacement for — a public health plan,” Volsky writes.
Carl McDonald and James Naklicki at Oppenheimer’s Equity Research department write, “As the co-ops are currently described, we think they would be a big positive for the managed care group, but it seems to us that they would be destined to fail from the moment of creation.”
,SEIU’s Andy Stern twitters: “Health Care Co-op is distraction from need for real competition and cost control. Good idea and attempts to avoid important debate on costs”