Monday, August 17, 2009

Co-op Sucker Punch?

By now you've probably seen the news: White House appears ready to drop 'public option.' This is great news, right?

But if the "public option" is being replaced by "co-ops," we need to ask if they're really different or if this is just "rebranding."

So far the prescription is $3-4 billion "seed money," which, ala Fannie Mae, would
"provide a lower cost of capital than private firms and an implicit claim on any other money the co-ops need. The feds may also exempt co-ops from the taxes that private insurers pay, which average about 1.2% of premiums. This would let co-ops offer lower prices and poach customers with government-subsidized premiums."
So, the government can still use regulation to undercut private insurance and push people into the co-ops. Depending on how much government control the co-ops have, this could quickly turn into the public option, and we're really back to square one.

Remember that many Democratic officials have already said publicly that the "public option" was simply a road to a single payer system. As one commentator put it, "[the public option] was never more than a means to an end. If this means isn’t working, they’ll find one that will."

Does that mean that co-ops are irredeemable? I don't think so. What we need is to keep government money and control to a minimum.

1) They should simply specify the policy they want and let the market produce it. No regulations, just say, "This is what we'll buy."

2) No artificially low premiums. That's not to say we can't give need-based assistance on premiums, but a person's unsubsidized premium should be based on the market, not on government price controls.

3) No price fixing. Let these co-ops negotiate their prices just like any other insurance company. If prices get too high, then the feds have to find a cheaper insurer.

4) People who buy into the co-op should get to use pre-tax dollars or get a tax-credit for it.

If the co-ops are constructed properly, they would be what many conservatives have wanted for years -- allowing people to form groups to buy health insurance as a collective across state lines to get the best prices. The only thing that's stood in their way for years has been federal law. Maybe now we can try some real conservative solutions to our government-created health care mess.

But is that what we have here? I doubt it. So, as others have pointed out, this is not the time to rest on our laurels. Keep the pressure on. Let Congress know that a "co-op" that is nothing more than a public option is not acceptable.

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