Today, in a conference call with bloggers, President Obama underlined the shortcomings of Sen. Kent Conrad’s (D-ND) co-op compromise and expressed support for a “robust” public option:
I’m still working out the details of a co-op approach. I will tell you that there are some instances of co-ops being set up and just having a very difficult time getting off the ground because they don’t have the scale and the resources to be able to compete effectively. What I’ve asked my health care team to do is to look at what evidence we have that this could provide the kind of competition that drives or helps to promote insurance reform and helps to include quality and drive down cost. If I can see some some evidence that this could work, then I’d be happy to consider it. But I will tell you that, as I’ve been very clear about before, I continue to believe that a robust public option would be the best way to go.
Both the Kennedy health bill and the Tri Committee bill in the House give Americans the choice of a public option. The Senate Finance Committee, which is expecting to produce a bill by Thursday, is still considering Conrad’s co-op compromise. Under Conrad’s proposal an insurance co-op would be “owned and operated for the benefit of its members — individuals and businesses with fewer than 10 employees” and would operate “at the state level or regionally” to “provide a non-profit, non-government, consumer-driven coverage option in every state to deliver maximum value for consumers.”
But as a Commonwealth brief points out, most co-ops have difficulty fulfilling their goal of offering small employers and individuals a choice in health plans and reducing costs. That’s because to attract a wide array of health plans and exert purchasing power (bargain on behalf of its members), co-ops must enroll large numbers of employers. But without the ability to “offer substantial choice among well-known health plans, it is difficult for co-ops to attract enrolless, who are drawn to co-ops in part because of their ability to offer such choice.” In other words, co-ops would lack the clout of Medicare — which can drive system innovations and payment reforms — Medicare-like administrative efficiencies, or the ability to use Medicare leverage to ensure a large provider network that accepts Medicare prices. A new cooperative health care plan won’t be able to lower costs and drive private insurers to aggressively bargain with providers (and pass the saving on to its beneficiaries in the form of lower premiums).
As former Gov. Howard Dean (D-VT) explained, “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…This is a compromise designed to deal with problems in the Senate. But it doesn’t deal with problems in America.”