Healthcare, government, and control

Stop the presses! It appears that the Senate Finance Committee has released a draft health care reform proposal that features cooperatives instead of a public plan. The proposal includes grants for risk capitalization and loans for start-up costs. I was starting to wonder if co-ops might get pushed back to the margins, but that is not the case. Much more on this later, as details emerge.

In the past day, there seems to be a shift in some of the reporting. There is more effort to dig into what healthcare cooperatives would mean, and that is a very good thing.

For starters, Ezra Klein did a joint blog forum with the CEO of Group Health, casting a bit of light on how that system works. It is important to note that Group Health is not just an insurer, but rather a self-contained provider with its own clinics and medical staff.

Don’t get me wrong: There are still some bizarre comments circulating. For example, Michael Tanner of the libertarian Cato Institute said that “There’s no reason to do a co-op or any other option if it’s not somehow managed by government,” and Sen. Charles Schumer (D – NY) seems to agree. In fact, a co-op is managed by management that is chosen by an elected board, which governs on behalf of the membership. Whatever Schumer and Tanner are picturing is not a cooperative.

But what really has me impressed is that the Heritage Foundation (a conservative think tank) ran an extremely informative piece on insurance co-ops and mutuals and other legal definitions. Once again, it is the conservatives who seem to be taking a critical look at this idea. Perhaps this is political maneuvering, but it might also be part of a genuine realization that co-ops are pretty much the best way to meet social needs without (much) reliance on the state. After all, Dana Rohrabacher (D – CA) is a solid right-winger who has also been the House’s main proponent of democratic employee ownership and control. In 1999, he set a goal that 30% of our economy would be employee owned by 2010. I think that would have been a lot nicer than what actually happened… (sigh).

In any case, I learned quite a bit from the Heritage piece, and it turns out that Group Health Cooperative is not actually a cooperative, because such things are apparently illegal in that industry. This is news to me, but might actually be true: Generally, state laws (including that in Washington) require incorporation as a cooperative to use “Cooperative” in an enterprise’s name. However, there may be some exception because Group Health is older than that statute. And I don’t know much about medical or insurance law, so I’ll take their word for it.

In any case, it is important not to get too bogged down in legal definitions. The important thing is that these new organizations need to be democratically accountable to the membership. Here’s why:

We should not assume that a public plan will mean that the system is somehow magically and permanently transformed. Whatever happens, the government will still be on the brink of insolvency. Worse, the same interest groups that made the health care mess will still be there, trying to make another mess.

Consider what has happened with financial regulation, which has effectively been captured by the industry it is supposed to regulate. What is to stop the medical interests (1/6 of the economy, remember) from continuing to interfere with elements of a public plan that don’t fit their interests? What is to stop them from trying to get the plan repealed or neutralized? Nothing, really.

On the other hand, what would stop them from interfering in co-ops? If co-ops are democratic, couldn’t an interest group donate to board candidates with pro-business philosophies, and thereby have its way? History is littered with demutualizations, in which co-op or mutual members are convinced to sell out when offered enough short term cash. And consumer co-ops are notorious (in the co-op world) for very low election turnout. So their elections might sell for cheap. We’ll need to be vigilant here.

In any case, we now have a grand total of one PowerPoint slide (see page 5) worth of information about the co-op proposal (which will probably have to compete with other proposals from other Senate committees, as well as from the House), so it is a bit too early to really tell how this is all going to work. I don’t see any especially red flags, but still have some serious qualms about this coming from the government. I also worry that the problem might be too big for this solution, and co-ops could get blamed for failing to fix the unfixable.

Nevertheless, it looks like the co-op plan is going to be with us for a while.

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