Ezra Klein

Ezra Klein

Ezra Klein writes an opinionated blog on economic policy, cap and trade, health care reform and pretty much anything else you can attach a chart to.

Co-Ops as an Alternative to the Public Plan

I've been on MSNBC twice today to explain the difference between a public option and a co-op. I think I'm getting sort of good at it. So I may as well do it here, too.

There's an idea out there called "the public option" grounded in a particular critique of the insurance industry. In particular, the argument is that the private health insurance industry is irreversibly compromised by its need to turn a profit. But we don't want people's access to health care to be governed by whether or not they're profitable.

The theory of the public option relies on the insights of the single-payer folks and the demonstration of Medicare, not to mention foreign systems: A robust public insurer can do a better job holding down costs and delivering access to high-quality care than a fractured private insurance system.

Obviously, a lot of people don't like these ideas. Among them are insurers, Republicans and, crucially, providers like doctors and hospitals, who fear that a large public insurer will hold down costs, which will in turn hold down incomes. They have argued, credibly, that they can unite and kill a bill that contains a strong public option.

In early June, Max Baucus asked Kent Conrad to solve this argument. Conrad came up with the co-op proposal. And I literally mean "came up" with it. Conrad told me that the idea emerged "out of conversations in my office after we were asked to see if we couldn't come up with some way of bridging this chasm." To put it bluntly, the co-op does not solve a policy problem so much as it solves a political problem. That political problem was, "How do you finesse a compromise on the public option?"

You could imagine a co-op proposal that actually offered a meaningful alternative to private insurers. Some months ago, Conrad, alongside public plan supporter Chuck Schumer, seemed to be edging in that direction. But I haven't heard anything similarly encouraging since then. The co-op is now a favored alternative for Republicans who don't agree that the profit motive is a problem in health insurance and who don't agree that single-payer or Medicare-for-All represents an appealing alternative to the current situation. Given that constituency, it's not likely to satisfy people who have the opposite perspective on all of those questions.

As the situation stands, there's no existing model for co-ops to follow and no policy specifics on Conrad's idea, so it's impossible to say whether, or how, they will work. I could imagine very good co-ops or totally useless ones. But given the political forces arrayed around the issue, I think that's sort of the wrong question. The idea works if it somehow solves the political problem that birthed it.

By Ezra Klein  |  August 19, 2009; 1:41 PM ET  | Category:  Cooperatives , Health Care Reform Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Co-Ops Could Work As an Option | Next: Belaboring the Fix

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