Why Replacing The Public Option With A Co-op Is A Very Bad Idea

Since the administration suggested that it’s not committed to a “robust” public health insurance option, supporters of Sen. Kent Conrad’s (D-ND) co-op compromise have argued that a member-driven cooperative could achieve the goals of the public option and appease conservatives weary of increasing the government’s involvement in the health care system. But this morning, Conrad conceded that the co-ops would not lower health care costs:

ROBERTS: What would they do to reduce costs? Because that is one of the central issues of health care reform.

CONRAD: Well, the important thing is they’d provide more competition. … Beyond that, I think it’s very important not to over-promise here. […]

ROBERTS: So nothing really in driving down the costs of service then?

CONRAD: Uhhh, no. If you believe competition helps drive down costs, then they would certainly contribute to holding down costs.

Watch it:

Indeed, small member-driven cooperatives would lack all of the advantages of a Medicare-like public health insurance option. Without relying on Medicare’s reach and infrastructure, a network of co-ops could not: 1) achieve the market clout necessary to to negotiate better rates with providers, 2) change the way care is delivered and 3) lower the costs of medical services. “It’s very difficult to start up a new insurance company and break into markets where insurers are very established,” said Paul B. Ginsburg, president of the Center for Studying Health System Change. “I don’t see how they’re going to obtain a large enough market share … to make a difference.” In a post titled “Co-Ops Are the Single Dumbest Idea I Have Heard in the Health Care Debate in Twenty Years,” long-time health care analyst Bob Laszewski identifies the heart of the problem:

OK, let’s start with the notion that a co-op can do a better job of negotiating prices and protocols. But wait, on day one how many members does the co-op have? Well it has no members on day one. So, the co-op’s provider relations guy goes to the doctor and hospital administrator and demands better prices and protocols. My guess is the provider’s response would go something like this, “So you are here because your stated objective is to screw my reimbursement down more than it is, you have no members now, and if I give you the rates to take members away from the existing health plans you are going to make life even more difficult for me than those existing health plans have?”

The co-op is not a compromise between supporters and opponents of a public option; it will effectively undermine the option, alienate progressives and fail to appease conservative opponents of reform.


As Matt Corley points out, “the reaction of prominent Republicans, conservatives, and the insurance industry to the idea of ‘a nonprofit health care cooperative as an alternative to a new government insurance plan’ indicates that such a concession would not lead to the “overwhelming vote in the United States Senate.” For instance, Sen. Orrin Hatch (R-UT) told the New York Times, “You can call it a co-op, which is another way of saying a government plan” and Sen. Jim DeMint (R-SC) agreed with Fox News’ Neil Cavuto’s claim that a co-op is really a “trojan horse.” The Senate Republican leader, Mitch McConnell (R-KY) issued a statement “that emphasized other complaints about Obama’s proposals” and the Republican National Committee “forwarded a press release/research memo to reporters today [yesterday] claiming that a “’public option’ by any other name is still government health care.”

Similarly, this morning, Rep. Eric Cantor (R-VA) said that even though he “don’t know really what a co-op is going to be…if it is just another name for government takeover of our health care, I’m not going to be for that, nor do I think most Americans will support that.” Meanwhile, Rep. Anthony Weiner (D-NY), is predicting that “about 100 Democratic members of the House would oppose a health care reform bill that didn’t contain a public option.” And while House Speaker Nancy Pelosi (D-CA) reiterated that “a public option is the best option to lower costs, improve the quality of health care, ensure choice and expand coverage,” leaders of the Congressional Progressive Caucus and Congressional Black Caucus have already “sent the same message to Health and Human Services Secretary Kathleen Sebelius,” protesting the White House’s weak commitment to the option. In the Senate, John D. Rockefeller IV (D-WV) said that a public option, is “a must” and Sen. Russ Feingold (D-WI) warned that “without a public option, I don’t see how we will bring real change to a system.”

If it abandons the public option, the administration will lose more than it will gain. Opponents of health care reform are not interested in arguing the merits of the public option, the cooperative, or broader health care reform; Republicans will label Obama’s reform effort a “government takeover” of health care, regardless of the actual proposal. After all, this debate isn’t about the actual policy, it’s about convincing Americans of a certain narrative. And by giving up on the public option, progressives are consecrating, if only implicitly, that reform isn’t about giving Americans a meaningful choice of coverage or keeping the insurers in check. As Bob Herbert laments, “if we manage to get health care “reform” this time around it will be the kind of reform that benefits the very people who have given us a failed system, and thus made reform so necessary.”


NBC’s FirstRead poses this challenge: “Find one, ONE, Republican (or even a conservative Democrat) who is publicly praising the White House’s backtrack in any of the clips this morning.”


,Media Matters Action is reporting that “conservative media follow GOP talking point, declare co-ops identical to public plan.”


,POLITICO — Kyl: Concessions won’t win over GOP:

The Senate Republican whip, speaking to reporters on a conference call from his home state of Arizona, said that even if the Democrats do away with a government-run insurance option, the GOP most likely won’t support the bill that’s being written in the Senate.