The difference between healthcare co-ops and a public option is only in who runs them

Kathleen Sebelius, AP Photo - George Ruhe

As any good used car salesman worth his salt says, “what will it take for you to buy this car today,” so, in his latest attempt achieve public approval and subsequent passage of the flawed healthcare reform plan President Obama began floating trial balloons about replacing the “public option“ with a cooperative or “co-op option.”

Due to undeniable and vocal opposition by the American people, the provision known as the “death panel” was removed, and most recently to aid in passing the huge, problem riddled proposal, Democrats are now suggesting that the “public option” be removed from the legislation as well.  But are cooperatives an alternative we should really consider to be part of healthcare reform?

Cooperatives have a long history in the United States, from apartment buildings to credit unions to farming co-ops.  For years they have existed in many industries to offer members access to a many types of goods and services at competitive prices and rates.

Co-ops are used in the insurance industry already although you may not realize this.  They have been in existence for many years in the US and are known as "mutual" insurance companies (i.e. Mutual of Omaha).  So, we can see that co-ops may be a viable private sector alternative to the hugely unpopular “public option.”   

Any group or company that organizes coverages provided by different insurance companies could be considered a cooperative and the insurers themselves, if representing multiple healthcare providers would be considered a co-op also.  

As you can imagine, bulk buying insurance has similar benefits to bulk buying other things; lower costs, agreeable terms of payment, and even sometimes preferential treatment – the AARP does this very thing with member discounts on vacation packages, car rentals and more.

Although cooperative exist in the insurance industry, they don’t exist in the healthcare insurance industry. Healthcare insurers today are either publicly held companies owned by shareholders or nonprofit groups functioning for charitable reasons beyond simply selling health insurance.

While some left leaning proponents say that the government must be involved to design, and at least initially fund the cooperatives, many more experts and American citizens say that government involvement in these ways amounts to the government controlling the means of production.  It only makes sense that for cooperatives to work, and for the United States’ healthcare market to reach its nominal cost equilibrium, the government must remove cumbersome regulations and reporting requirements in the free market. 

But Senator Charles Schumer (D-NY), a vocal advocate of the public option and single payer, strongly suggest a nation-wide co-op, formed as a GSE like Fannie Mae, Freddie Mac (creators of America's financial crisis) AMTRAK or the Postal Service, run by an Obama appointee that would essentially be unaccountable to anyone – It would be a government plan in all instances except in name.

The Heritage Foundation says that “If Congress wants to provide Americans access to health co-ops, it would need to make it possible for an institution to combine tax-exempt (non-profit) status with mutual insurance status, something health plans cannot do today.  Congress should allow mutual health insurance companies to form based on the credit union model.  Under this model, Congress would simply grant non-profit status to mutual insurance companies, justified by the "member benefit" they provide.”

The American people are waking up to the political manipulations happening in Washington DC today, and as they rub the sleep from their eyes, are realizing that a healthcare plan, any healthcare plan, under government control will cost more than projected, allow for political quid pro quos, foster political strong-arm pressure, create market manipulation, and ultimately cost citizens in quality of care and cost seniors by devaluing their lives to save money.

More importantly, the question of a public option, versus cooperatives offers only moderate relevance in the healthcare reform debate and is only one portion of the proposals being reworked Washington today.  If we remove the cooperative/public option argument there still exist intrinsic issues of government infringing on civil liberties and the free-market.

Let me say that while I am for healthcare reform, I am not for not healthcare reformation implemented with planned federal management - ever.  If the government controls healthcare, it circumvents the 10th amendment.  it will ration healthcare, it will decide which procedures to allow, who gets them, and how much money to spend on individuals and elderly in need of care.

If it is involved in more than in a regulatory fashion, we as a free people should have no part of it.