Below The Beltway

With all indications suggesting that the “public option” is dead, the health care debate is now shifting attention to the idea of health care co-operatives:

As prospects fade for a public, or government-run, option as part of health-care reform, key senators are considering another model to create competition for private insurers: member-owned, nonprofit health cooperatives.

Sen. Kent Conrad (D-N.D.), the chief advocate for including cooperatives in reform legislation, has cited examples as disparate as the Land O’Lakes dairy concern, rural electricity cooperatives and Ace Hardware.

But so far, cooperatives have been defined in the health-care debate primarily in terms of what they are not: They would not be run by the government.

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There are at least two major health-care organizations that could serve as models for Congress: HealthPartners in Minnesota and Group Health Cooperative, based in Seattle. They employ physicians and own health-care facilities, giving them greater power to control the delivery of care.

A major question Congress would have to decide is whether the new cooperatives would be integrated medical systems, like HealthPartners and Group Health. Or, would they simply negotiate reimbursement contracts with health-care providers, as conventional insurers do?

According to Conrad’s Web site, co-ops would contract with providers and act as insurers. That could make them more like mutual life insurance companies, which are owned by their policyholders and are therefore somewhat insulated from the pressures and temptations of Wall Street.

Like the proposed public option, state or regional co-ops would be among the choices offered through a new regulated marketplace, in which eligible individuals could more easily comparison-shop for insurance.

However, co-ops would lack perhaps the main advantage of the public option: reimbursement rates for doctors and hospitals set by federal law, like those paid by Medicare, the program for older Americans. Federally determined reimbursement rates were central to the cost-saving promise of a government-run health plan and a potentially powerful competitive advantage. They were also a lightning rod for intense opposition from health-care providers and private insurers, who denounced the public option as a threat to their financial survival.

Co-ops would lack the ability to piggyback onto existing government institutions, like the ones that help administer Medicare.

Sounds better than the “public option” right ?

Well, as Cato’s Michael Cannon notes, maybe not:

As I have said before, establishing health insurance co-operatives is a poor alternative to the public option plan. Opponents of a government takeover of the health care system should not be fooled.

Government-run health care is government-run health care no matter what you call it.

The health care “co-op” approach now embraced by the Obama administration will still give the federal government control over one-sixth of the U.S. economy, with a government-appointed board, taxpayer funding, and with bureaucrats setting premiums, benefits, and operating rules.

Plus, it won’t be a true co-op, like rural electrical co-ops or your local health-food store — owned and controlled by its workers and the people who use its services. Under the government plan, the members wouldn’t choose its officers — the president would.

The real issue has never been the “public option” on its own. The issue is whether the government will take over the U.S. health care system, controlling many of our most important, personal, and private decisions

Whether it’s a co-op or a “public option”, it still amount to more government control over a segment of the economy that is already suffering due to too much government regulation. It’s not a solution, it’s just a bad idea by a different name.