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The Co-op Health Care Option, Compromise or Cop-out?

June 12, 2009 - by Donny Shaw

Word on the street is that Senate Democrats, unlike their counterparts in the House, might not have 60 votes to pass health care reform legislation if it includes a public option to compete with private insurers. So far, a public option has been left out of the Senate’s draft health care-reform legislation.

While all the big progressive groups are busy whipping votes in support of the public option, trying to get to 60 in the Senate, Senate Budget Committee Chairmen Sen. Kent Conrad [D, ND] (pictured above w/ a variety of gavels) is developing a compromise proposal: federally-chartered not-for-profit health care co-ops.

The idea is generally getting panned by progressives. The feeling isn’t that the co-op ideas is bad per se, but that it seems to be a sudden and poorly thought out attempt at pre-negotiating that threatens a more thoroughly thought out plan to let the government offer high-quality health care at a competitive price. As Matt Yglesias put it, "anything that drops the public plan is a proposal to drop the public plan not really a public plan “compromise.”

Washington Post blogger Ezra Klein interviewed Sen. Conrad yesterday on the origins of the co-op plan:

Tell me a bit about your idea for chartering co-ops in the health insurance market.

Maybe it would be most useful to tell you how I got into this. The G-11 group, which is the members of the Senate, Republicans and Democrats, chairmen and ranking members of the key committees, who’ve been given the overall responsibility to coordinate health care reform in the Senate, asked me 10 days ago to come up with something to bridge the divide between those who are strong adherents to the public plan and those who are strongly opposed.

The co-op structure came to mind because it seems to fulfill at least some of the desires of both sides. In terms of those who want a public option because they hope to have a competitive delivery model able to take on the private insurance companies, a co-op model has attraction.

And for those against a public option because they fear government control, the co-op structure has some appeal because its not government control. It’s membership control, and membership ownership.

Also the co-op model has proven very effective across many different models. Ocean Spray in the cranberry business, and Land of Lakes in the dairy business, and Puget Sound in the health care business.

How do you respond to someone who says, this is a terrific idea. More competition is always welcome. But why instead of a public option? Why not do it alongside and let a thousand coverage models bloom?

Votes. The problem is this. If you’re in a 60 vote environment in the Senate — and I believe we are, because I believe reconciliation simply won’t work — if you begin tallying up the votes, I believe that virtually all Republicans are against the public option and some democrats are. So how do you get to 60?

How many Democrats would you estimate are against a public option?

I don’t know for certain, but I think at least three, and maybe more.

And why do you think that reconciliation won’t work for health reform.

Reconciliation was never designed to write substantive legislation. It was designed solely for deficit reduction. The whole idea was you would change numbers, not policy. You would change numbers on the revenue side of the equation and the spending side of the equation.

And so, the way it works, under current rules, if you’re in reconciliation, you have to be deficit neutral over five years. Under the budget resolution, health care can be deficit neutral under 10 years. That’s a big difference.

Two, under reconciliation, you’re subjected to the Byrd rule. The Byrd rule says that anything that doesn’t cost money or save money, or that only costs money or saves money in a way that’s incidental to the policy, is subject to strike. The result, for instance, is that all the insurance market provisions are subject to strike. All the wellness and prevention provisions are subject to strike. The Senate parliamentarian said to us that if you try to write substantive health reform in reconciliation, you’ll end up with Swiss cheese.

I’ll stop here, though you should go over to Ezra’s blog and the read the whole interview.

Conrad’s last point about “The Byrd Rule” in the reconciliation process is key to this whole thing. The rule requires proposals attached to the budget to be more than incidentally related in substance. But there is no working definition of what qualifies for reconciliation. Republicans, under Bush, successfully used the reconciliation process to enact tax cuts and oil drilling provisions.

So, can health care reform be done in the budget, or are its budgetary effects only incidental? Sen. Conrad, apparently, thinks it can’t be done. Chris Bowers at Open Left and Charles Lemos at MyDD both argue that Conrad is jumping to conclusions and that health care reform very well may qualify for the reconciliation process. If the Democrats try to use the reconciliation process, the determination, ultimately, will be made by the Senate Parliamentarian, a non-partisan resident expert on Senate procedure. There’s no way to really know how the parliamentarian will rule, so moving to compromises like the co-op idea before even trying to get a ruling on reconciliation seems basically like a cop-out.

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