Co-Ops: A Design of Politics

In hopes of extinguishing concerns of a government takeover and reducing the political risk for moderate senators, health-care co-ops have emerged as a compromise solution to the highly-contested public option. Ezra Klein is correct to point out that co-ops materialized as a necessity for the politics of health care, not as a first line answer to a health policy conundrum. As a result, the effectiveness of health care co-ops must be measured by their impact on policy (reducing costs and increasing insurance competition) and their impact on politics (increasing the prospect of passing health care reform).

The structure of health-care co-ops remains ill-defined. In order to have any impact, co-ops would have to achieve economies of scale- - a success that will hinge on their ability to attract a sufficient number of members, predicted at 500,000 customers, to negotiate competitive rates. Yet state or regional level organization may be more likely since attempts of organization at the national level would only recreate the political problems of a public plan; not only disappointing those on the left who view the public option as a necessity, but also reigniting cries of a government takeover. With national organization, conservative replays of Senator Reid's comments, "We're going to have some type of public option, call it 'co-op', call it what you want," would only gain more traction.

On a policy level, these co-ops most likely will lack the negotiation power of Medicare, reducing their ability to dramatically cut premiums. Yet, with the expected $6 billion dollars of seed money, co-ops could successfully emerge as an alternative to insurance monopolies in certain markets. Politically, this dissociation from the government buffers moderate Senators from political retribution by undermining suggestions of socialized medicine and bolsters President Obama's claim that if you like your health insurance, you can keep it.

Co-ops cannot be the major lever of cost control for health care; their existence will not alleviate the acute need to re-examine the health care finance and delivery systems or reshape preventive health. They may, however, provide President Obama the best opportunity to fulfill his desire of increasing choice, while avoiding the major government intervention that seems to ratchet up anti-reform dialogue.

By Arjun Parasher | August 23, 2009; 11:45 PM ET | Category: Cooperatives , Health Care Reform , Health costs , Public option Save & Share:
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