Weighing the Public Option V. Health Care Cooperatives

Because of increasing pressure from both the right and left, Congress is in the position of either a public option for health care reform, a private health care consortium/cooperative, or not doing either and adding a trigger mechanism that would kick in if the private sector failed on benchmarks to ensure all Americans have access to affordable health care. I have written about the public option in general and will compare the benefits of it against the cooperative and exchange options. Finally, I will discuss the trigger option.

According to Consumer Watchdog.Com "a carefully constructed “public option” to private insurance would provide an antidote to the market consolidation that has propelled premium increases and administrative inefficiencies, shrunk coverage and degraded quality. However, it can only succeed if it:

• Provides all Americans access to the largest risk pool possible. Universal access to Medicare provides the best option.
• Includes new regulation of private insurers to level the playing field with the new public option–namely guaranteed issue, community rating, and a guaranteed base benefit.

The option to join Medicare, regardless of age, would be beneficial to Americans because by almost every measure, Medicare is cheaper and more effective than private plans, according to government and academic research. For example, Medicare spends 2% of revenue on overhead; private insurers typically spend 25% to 27% for overhead and profit."

Opponents of the public plan say that the public option would drive private insurers out of business. However the Congressional Budget Office estimates that no more than 10 or 11 million people or 3.6% of the current US population would be enrolled in any public option by the year 2013. The only private insurer that would be driven out of business would be those that are offering marginal plans to those without insurance right now. Hardly seems like a loss, particularly from a consumer's perspective.

The cooperative model as proposed by Sen. Kent Conrad could be formed statewide or in geographic regions. They would be the insurer that would contract directly with health care providers, and like Group Health, would be self-governed by an elected board. Startup money could come from the federal government through grants or loans. At present, there are two such co-ops in the US, Group Health Cooperative of Washington and Health Partners in Minnesota.

The other type of cooperative or exchange is an insurance cooperative where middlemen would shop for the best insurance rates and options from private insurers and make them available to the public who enroll in the cooperative.

The supporters of the two types of programs insist that the free market will respond better if the government is not involved. Unfortunately, the facts seem to suggest that larger insurers pick and choose where they will insure and the costs of insurance to those in marginal markets are higher than elsewhere. For the health care cooperative there is the additional issue of being locked out by hospitals and doctors who can get a better deal from the health insurer giant in their area.

Those who are not sure any additional competitors are needed, that insurers need to be forced to guarantee coverage even for those with pre-existing conditions, say that what is needed is a government trigger. If private insurers are not providing universal, affordable coverage that then is when other additional options should be considered. On a common sense level this sounds good, but the period of time for the trigger options are proposed to be three or four years into the health care reform plan. This would likely mean that some people could be without insurance for five to seven years.

If the United States is serious about creating coverage options and keeping down the costs of providing care, the mine field of how to cover citizens will have to be crossed. By spreading costs out over more people, all Americans are likely to have lower costs in the longer run.

Key Democrat Throwing the Towel on Public Option for Health Care Reform

According to CNN, Democratic Sen. Kent Conrad of North Dakota there are not enough votes in the Senate to put the public option on the table and "it was futile to continue to "chase that rabbit" due to the lack of 60 Senate votes needed to overcome a filibuster."

"The fact of the matter is there are not the votes in the United States Senate for a public option. There never have been," Conrad said on "Fox News Sunday."

His comment signaled a shift in the health care debate, with Obama and senior advisers softening their support for a public option by saying final form of the legislation is less important than the principle of affordable coverage available to all.

The question everybody should have when they attend a town hall meeting from now on is: if everybody is required to have insurance, who will insure that it is affordable?

The normal free market model tends to low ball costs to lure people to join a program hoping to drive other competitors out of the market and then up costs when there is no reasonable viable option to the consumer. I would like any Senator or President Obama to explain how they will prevent that from happening, if there is no public option or watchdog/oversight.

What if private insurers, like they have been alleged and known to do, collude with each other. The government hasn't enacted Taft-Hartley Act in a bazillion years. What tough measures will be in place and who will guard the guard, since many times agencies are stocked with veterans and lobbyists from the industries they are supposed to watchdog.

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