Monday, August 17, 2009

Beware of the "co-ops" that may be offered in place of Obamacare's "public option"

Via Amy Ridenour, here's how Cato's Michael Tanner described them last June:
"A closer look suggests that the only thing intriguing about the co-op alternative is whether it is a completely meaningless construct or simply camouflage for the 'Public Plan' option...

...The new co-ops would presumably have to advertise like other insurance companies, build physician networks, pay competitive reimbursement rates, and in general act like, well, every other insurance company. It is suggested that the new federal co-ops would be nonprofits, and therefore would offer better service and lower costs. But many insurance companies, including 'mutual' insurers and many 'Blues,' are already nonprofit companies. If the new co-ops operate under the same rules as other nonprofit insurers, why bother?

And there's the rub. Supporters of government-run health care have no intention of letting the co-ops be independent enterprises that operate by the same rules as other insurers. This is not really about creating more choices and competition. In fact, Sen. Charles Schumer (D-N.Y.) makes it clear, for example, that the co-op's officers and directors would be appointed by the president and Congress. He insists that there be a single national co-op. And Congress would set the rules under which it operates. As Sen. Max Baucus (D-Mont.) says, 'It's got to be written in a way that accomplishes the objectives of a public option.'

If it looks like a duck, walks like a duck, and quacks likes a duck, it's probably a duck.

Moreover, several previous attempts by governments to set up co-ops have, in fact, failed. Perhaps the largest such failure was the Florida Community Health Purchasing Alliance, which was set up by the State of Florida in 1993, and at one time covered 98,000 people. It was unable to attract small business customers and ultimately went out of business in 2000. Does anyone really believe that a Congress that is busy bailing out banks and automobile companies because they are 'too big to fail' is going to sit idly by while one of these new co-ops suffers a similar fate?

If a 'co-op' is run by the federal government under rules imposed by the federal government with funding provided by the federal government, it's simply government-run health insurance by another name. Opponents of a government takeover of the health care system should not be fooled. "

As I have said before elsewhere, what Chuckie Schumer wants, Chuckie Schumer gets.

Quack, quack......


From Tanner's colleague Michael Cannon:

"Having Congress charter a health insurance 'cooperative' is just another way of creating a new government-run program that would drive private insurers out of business.

The definition of a cooperative is a health plan governed by its enrollees. Since a government chartered co-op won’t have any enrollees at first, it will be governed like any other government program. So when the Obama administration and congressional Democrats say, 'We’re going to create a co-op,' what they mean is, 'We’re going to create a new government health program but we will turn it over to the members in five years. We promise.'

.......Who was it that said that thing about putting lipstick on a pig?"



  1. Seeing that they cannot pass their ultimate goal, they have realized that the issue must be chipped away at piece by piece. I liken it to carving a statue, it takes thousands of tiny blows to get to the finished product. In this case, a slow road to socialism

  2. Given the $300 billion that "private" health insurers currently receive in government subsidies, one could just as easily argue that "private health insurance" is a "trojan horse" for government-run health care. But I guess you are ok with taxpayers subsidizing the salaries, bonuses, mansions and airplanes of "private" health care company executives.


  3. Does someone want to tell our "expert" to read his own damned link for comprehension?

    Private health insurers DO NOT receive $300 billion in government subsidies. EMPLOYEES RECEIVE THE $300 BILLION IN SUBSIDIES.

    The amount of money contributed by the employer to the employee's premium for their health insurance is part of the employee's compensation, but is excluded from the employee's income on a pre-tax basis in much the same way as an employee's contribution to a 401K is.

    Here's the passage from dingledork's link which establishes what the $300 billion actually is:

    "Edward Kleinbard, the top economist for the Joint Tax Committee in Congress, says that tax subsidies for private health insurance now total more than $300 billion a year.

    These subsidies are invisible to most people, and they lead people to believe that health insurance is a gift from their employers. That provides incentives for people to demand more and more generous health insurance policies, generally at the expense of higher cash wages."

    How hard is that to understand, even for an illiterate journalist?

  4. Bubba, you deliberately twist what I wrote, which was a direct quote from the article I cited, and you avoid the larger point.

    Would you be in favor of eliminating the tax subsidy for health insurance, and where do you think the private health insurance industry would be if the subsidy were eliminated?

    If the article wasn't clear enough for you, try this:


    "Over sixty percent (60.5 percent) of health spending in the U.S. is funded by government. Official figures for 2005 peg government’s share of total health expenditure at 45.4 percent, but this excludes two items:

    1. Tax subsidies for private insurance, which cost the federal treasury $188.6 billion in 2004. These predominantly benefit wealthy taxpayers.

    2. Government purchases of private health insurance for public employees such as police officers and teachers. Government paid private insurers $120.2 billion for such coverage in 2005: 24.7 percent of the total spending by U.S. employers for private insurance."

    Given those facts, it's rather difficult to get government out of health care, isn't it?

  5. Buie is the ultimate spin machine and leaves out pertinent points to respond. And his link is just as useless as the original post as no one has the time to read some treastise on health care to respond.

    1 Tax subsidy? I assume this would be from the liberal view that all $$ are the property of the government and we are priveleged to keep some of our $$. This is not some payment to a private insurer. Are you saying since food purchases are taxed at a lower rate that food producers are getting a subsidy? Are you in favor of high taxation of basic items even though it may have a benefit to more wealthy people?

    2. The same applies here. The individual is still paying for his/her healthcare in reduced wages so there is no subsidy there.

    Since the government is not running things you cannot say they are running healthcare in this manner.