Co-ops may be the compromise answer

Details on Co-ops

Kathy Sebelius, Secretary of the U.S. Dept of Health and Human Services, said the White House would be open to co-ops instead of a public option — a sign that Democrats want a compromise so they can declare a victory.

Under a proposal by Sen. Kent Conrad, D-N.D., consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own.

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government. They would be required to maintain the type of financial reserves that private companies are required to keep in case of unexpectedly high claims.

"I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing."


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Co-ops may be the best compromise solution to still get the competition needed to reign in health care costs. In the end Co-ops may gain some votes from Republicans and may lose a few of the hardest line liberals. It should provide a net gain. But, we still need other elelments to achieve real reform - i.e.- payment reform based on episodes of care, quality-based incentives and incentives to implement LEAN techniques. See previous posts for details on these items.