A few words on the health care co-op plan

The Wall Street Journal ran a story on the Senate Finance Committee’s draft health care reform proposal, which claims that the proposed insurance cooperatives would “see direct oversight from the Health and Human Services secretary, who would (have) authority to make ‘final decisions about approvals of business plans and distribution of funds.'”

My understanding of the item quoted (in its proper context) is not that there would be direct and ongoing oversight beyond the usual legal standards of the industry. Rather, this wording apparently describes criteria by which the secretary makes the decision to disburse the funds during the start-up process. Ultimately, that is not much different than any lender or grantor wanting to make sure that their money will be well spent, and I can’t imagine that anyone would want the government to disburse money without an appropriate business plan. That is, unless they were a crook looking for easy money.

The finished proposal may include ongoing oversight, but the draft proposal does not have any evidence of this and seems to address only the start-up financing. Information is admittedly scarce, but unless the Journal knows something that they aren’t reporting, it seems that they’ve jumped to a conclusion here.

By doing so, they are needlessly fueling resistance to this proposal. In fact, cooperatives are generally democratically controlled by their members, which is the entire reason that they are being discussed as an alternative to a public plan. While imperfect, a cooperative approach to health care reform deserves a fair chance. Cooperatives are an unfamiliar concept to most people (and various public figures are making erroneous statements), so it is especially important that the media avoid mischaracterization of cooperatives.

There is a steep learning curve here, so I encourage my readers to watch for these sorts of errors, and write in when you see them. I’m not asking you to like the proposal, just trying to limit misinformation. Thanks for your help.

In other news, the National Cooperative Business Association (NCBA) has weighed in. It looks like the official voice of American co-ops is approximately as intrigued and apprehensive as I am (when was the last time you saw “if” in the title of a press release?) NCBA President Paul Hazen notes that government capitalization will be needed for these co-ops to be real competitors in the market, but also recalls that co-ops are generally pretty good at paying back their loans to the government.

NCBA has also helpfully provided a link to relevant pages from a recent study on the economic impact of health cooperatives, conducted by the University of Wisconsin Center for Cooperatives. (full report here)

This proposal still has to go through the meat grinder, so there’s no telling what will come out on the other side. But it seems entirely possible that co-ops will be prominently featured in the growing debate. Whatever happens, I hope that this episode serves as an opportunity for us to encourage co-op development, which will be a good thing regardless of what government does.

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