Co-ops gain ground as health care option

GREEN BAY, Wis. – As President Barack Obama traveled to the heartland to sell a government-run insurance plan as essential to health care reform, Senate negotiators began to explore a possible bipartisan compromise modeled after rural cooperatives.

Creating a “public option” to compete with private coverage has emerged as a significant hurdle as Congress begins to debate legislation to restructure the nation’s health care system, with the aim of delivering a bill to Obama by mid-October. Opponents include most Republicans and some moderate Democrats, who warn the government would enjoy an unfair cost advantage and force private insurers out of business.

But many lawmakers who are skeptical of a federal plan expressed interest in an alternative proposal by Sen. Kent Conrad, D-N.D., to create member-run health care cooperatives. The idea was discussed by Obama and Senate health care negotiators at a White House meeting Wednesday, participants said. And on Thursday, the idea dominated a closed-door meeting of the Senate Finance Committee, one of two panels involved in crafting the Senate bill.

Obama told supporters in a local gymnasium in Green Bay that he would seek to create a health-insurance exchange to allow one-stop shopping. But the president added, “One of the options in the exchange should be a public insurance option – because if the private insurance companies have to compete with a public option, it will keep them honest and help keep prices down.”

The Conrad proposal is modeled after rural electricity, farming and telephone cooperatives that are owned and organized by members. The entities would negotiate rates with health care providers and would have to meet the same licensing and regulatory requirements as private insurance companies, the senator said.

“I tried to come up with something that is not government-controlled, is a competitive delivery model, but nonprofit,” Conrad said in an interview. “It would be on a level playing field with everybody else … with a different ownership structure.”

Sen. Charles Grassley, of Iowa, the ranking Republican on the finance panel, said he liked the Conrad plan, and said Obama raised no objections when the issue surfaced at the Wednesday White House meeting, which Grassley attended. Sen. Mike Enzi, of Wyoming, the ranking Republican on the Senate health committee, the other panel with jurisdiction over reform legislation, said he is seeking more details. He said the co-op approach could “increase the level of competition, if it were done right.”

Sen. Charles Schumer, D-N.Y., a member of Democratic leadership and the Finance Committee, said he was helping to negotiate a deal that would be acceptable to Democrats who favor direct government intervention. He called it “a work in early progress.”

Schumer said he objected to setting up a series of smaller organizations around the country, and instead favored at least one national co-op to compete against the big insurers.

“It has to have clout, it has to be large. … There would at least be one national model that could go all over the country,” Schumer said. It also would require “a large infusion of federal dollars” at the outset, he said, although he declined to cite actual figures.