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Co-ops don’t work – and they won’t get Republican support

Sam Stein writes yesterday in the Huffington Post that the notion that co-ops will do anything to solve our health care crisis has already been debunked:

The U.S. General Accounting Office produced a report on cooperatives in March 2000 that was mostly sour on the idea. Using five different co-ops as examples, the study concluded that on the key function — lowering the cost of insurance — these non-profit insurance pools came up well short.

"The cooperatives’ potential to reduce overall premiums is limited because (1) they lack sufficient leverage as a result of their limited market share; (2) the cooperatives have not been able to produce administrative cost savings for insurers; or (3) their state laws and regulations already restrict to differing degrees the amount insurers can vary the premiums charged different groups purchasing the same health plan."

And without a large number of participants, co-ops essentially were subject to the whims of the insurance market, unable to use market influence to get consumers better deals on coverage. "None of the purchasing cooperatives we reviewed had a large enough market share to create bargaining leverage and therefore had a limited ability to significantly increase the percentage of small employers offering coverage in their state," the study found.

Fellow blogger Scarecrow noted the same thing, highlighting a Commonwealth report with similar findings. As Senator Rockefeller explained, co-ops are untested, unstudied, and so far, cannot work:

Without a public health insurance option, health reform will not result in lower costs. Therefore, without a public health insurance option, health reform will not work.

Need more evidence? The New York Times dumps all over co-ops today, saying they’re "ill-defined." What’s more, apparently a current insurance industry bad actor, Blue Cross Blue Shield, could be a co-op:

Mr. Conrad’s own state demonstrates the uncertainties surrounding cooperatives. Blue Cross Blue Shield of North Dakota dominates the state’s private insurance market, collecting nearly 90 percent of premiums. As a nonprofit owned by its members, the company would hope to qualify as a co-op under federal legislation, said Paul von Ebers, its incoming president and chief executive.

It’s fairly clear that if co-ops mean Blue Cross Blue Shield, with their double-digit rate hikes, we’re going to be stuck with the status quo.

That’s the policy reasoning. Now for the politics.

Co-ops are being sold as a bipartisan deal. Accept co-ops in the Senate, we’re told by those negotiating this deal (Senators Max Baucus, Jeff Bingaman, and Kent Conrad on the Democratic side, and Mike Enzi, Chuck Grassley, and Olympia Snowe on the Republican side), and we’ll have a bipartisan deal that can pass the Senate.

That’s wishful thinking. As the Times said, "What is certain is that, as a substitute for a government plan, the co-op concept disappoints many liberals and stirs little enthusiasm among insurers or Republican lawmakers."

Republicans as a party in the Senate oppose the co-op proposal:

There’s a lot of GOP leadership in that above list, but even more importantly, two out of the three Republican Senators negotiating themselves oppose co-ops. Senator Grassley is opposed and Senator Enzi is really opposed.

On top of that, the only way Grassley will support a bill is if a ton of other Republicans support it as well:

In an interview today on MSNBC’s "Morning Meeting with Dylan Ratigan," Senate Finance Committee ranking member Chuck Grassley (R) said he’d vote against any health-care reform bill coming out of the committee unless it has wide support from Republicans — even if the legislation contains EVERYTHING Grassley wants.

"I am negotiating for Republicans," he said. "If I can’t negotiate something that gets more than four Republicans, I’m not a good negotiator."

When NBC’s Chuck Todd, in a follow-up question on the show, asked the Iowa Republican if he’d vote against what Grassley might consider to be a "good deal" — i.e., gets everything he asks for from Senate Finance Chairman Max Baucus (D) — Grassley replied, "It isn’t a good deal if I can’t sell my product to more Republicans."

In short, Grassley says he’s willing to walk away from legislation in which he gets everything he wants.

So how is there a bipartisan deal here? Even if Grassley and Enzi agree on a deal in committee, it’s unlikely to get their support on the floor. And with GOP leadership so set against co-ops, I don’t see other Republicans voting for it, either.

(Bill Scher at the Campaign for America’s Future has more.)

(also posted at the NOW! blog)

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Jason Rosenbaum

Jason Rosenbaum

Writer, musician, activist. Currently consulting for Bill Halter for U.S. Senate and a fellow at the New Organizing Institute.