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Are Negotiations Over The Co-Op Compromise Falling Apart?


It's obviously a big deal that Sen. Chuck Schumer is suggesting that Democrats may need to move forward without significant Republican support if the GOP can't come to some sort of accommodation with the public plan. But I think people are focusing too much on Schumer's comments on the public plan and not enough on the insight he's offering into the negotiations happening on the Finance Committee.

Schumer said Finance Republicans had rejected several proposals designed to beef up the suggested nonprofit insurance co-ops. These included setting up a national structure for the co-ops, $10 billion in government seed money, power to negotiate payment rates to medical providers nationwide and creation of a presidentially appointed board of directors.

This is what we call a "clarifying moment." One of the arguments against the public plan is that it's the thin edge of single-payer wedge. Many liberals, in fact, hope that it will prove exactly that. But "level-playing field plans" -- public plans with no extra subsidies or legislative advantages -- take care of those objections. But that concession from the liberals hasn't been greeted as significant by those across the aisle.

When I spoke to Sen. Kent Conrad about his co-op plan proposal, I asked him why he considered it a concession for his Republican colleagues. His answer was hesitant.
"Ah, you know, you'd have to ask them," he replied. "It would just be my surmise on why some of them don't like it. They really don't want a competitive model, at least some of them."

That appears to be what Schumer is finding. Republicans, he suggests, are standing lockstep even against efforts to create a private co-op system that could offer an alternative to for-profit insurance. Their concern with the co-op plan is not that the government would be taking over the health-care system. It's that the current insurance providers would face unexpectedly aggressive competition in the marketplace. Which raises an interesting, and potentially clarifying, question: Are Republicans in this to preserve the healthy functioning of a competitive private market or preserve the profits of the currently dominant insurance companies?

Photo credit: Harry Hamburg -- Associated Press Photo.

By Ezra Klein  |  June 22, 2009; 3:04 PM ET
Categories:  Health Reform  
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I think it is less about the Public option and more about politics. The Republicans know if Obama passes a good health care bill it will help Democrats for years.

They just want him to fail, because if he fails it helps them win elections.

The co-op fight was just another in a long line of posion pills to try to either kill reform or make it expensive, problematic, and unpopular.

Posted by: JonWa | June 22, 2009 3:25 PM | Report abuse

Can you please explain how the public plan works? I know you've posted on it before, but it still remains a hazy issue for me.

Who funds the plan?

Who administers the plan?

Who negotiates rates with healthcare providers?

What exactly is a non-profit insurance co-op? How does that work? Is it like an HMO, a PPO? Does it tell me what docs I need to see for care?

How will this compete in the market with private plans? Who has access to the co-op?

Does the co-op just add more administrative layers to an administratively top-heavy system? If no, then what's different?

Posted by: anne3 | June 22, 2009 3:26 PM | Report abuse

Klein asks: "Are Republicans in this to preserve the healthy functioning of a competitive private market or preserve the profits of the currently dominant insurance companies?"

Is this a trick question?

OK, more seriously....

Part of the explanation may be an ideological adherence to private for-profit solutions for all problems. Yes, the private market does some great things, but it's not an end unto itself. We like private markets because of the results they usually produce: better quality goods and services at lower prices.

But just because markets usually get that result doesn't mean they will always do so. Regarding health care, Europeans have shown that they can produce just about the same health outcomes while we spend almost twice as much per capita as they do. Even with a fully privatized system, I find it hard to believe that we'd generate 50% in savings. That tells me that markets just don't put the incentives in the right place for good health outcomes.

But the market ideologues have confused process with outcomes. They ignore the results and adhere to the means--private for-profit markets uber alles--over the ends--higher quality medical care at lower prices.

I want whatever works. If it's the market, as it usually is, I'll go for that. But I'm not going to ignore what seem to me clear evidence that markets don't always get us the results we want. And results are where the emphasis should be. We should support whatever process gets us there, regardless of what name goes on it.

Posted by: dasimon | June 22, 2009 3:37 PM | Report abuse

Ezra: "Are Republicans in this to preserve the healthy functioning of a competitive private market or preserve the profits of the currently dominant insurance companies?

Capitalists SAY they are for competitive markets, but their ACTIONS are always to diminish it (mergers, acquistions, price collusion, restraint of trade activities via 'trade associations', etc.).

It is only this ACTUAL form of competition that Republicans want to continue - the non-competition type. So there isn't two choices. Actual competition as practiced is profit maximizing as well. The GOP wants to protect this anti-consumer environment at any cost. It is a large source of their campaign support and ideological base.

In addition, the congressional GOP, both houses, needs desparately to have something they stand for (or against), so almost any target will do. Their wails of anguish will be directed at whatever policies and plans are convenient.

[I apologize for the ALL CAPS above, but how dumb is it for a blog not to support commenter use of italics and emphasis: I guess WaPo is confortable in 1996 thinking.]

Posted by: JimPortlandOR | June 22, 2009 3:39 PM | Report abuse

I'm still confused as to why the co-ops are necessary when we have the Blues.

In addition, Mr. Klein fails to point out that one main advantage - indeed the main advantage in my view - of the co-ops in the Conrad bill is that they don't have to comply with the state by state mandates (or community ratings, depending on your jargon). Thus, the co-ops really do have a legal advantage over the private plans.

Posted by: Dellis2 | June 22, 2009 3:43 PM | Report abuse

That's like asking if a defense lawyer is motivated by wanting to see justice served, or is in it just to get his client off the hook at any cost. Duh.

I hope we have entered the bluff-calling portion of the health care debate. And I hope the Democratic leadership sees through the BS and proceeds forthwith without a second though of bipartisanship as an end in itself.

Ya gotta dream...

Posted by: jeirvine | June 22, 2009 4:21 PM | Report abuse

Republicans are the lousy cheating boyfriend that will let you stay with him if you do exactly what he says. They'll even kiss you on the mouth and sleep with them as long as it's on their terms. Of course the minute you ask them to stop messing around with their other girlfriends (the insurance industry, the club for growth, etc.) ... they bad mouth you in public, threaten to leave, and go looking for sympathy from your worst enemies.

Posted by: jefft1225 | June 22, 2009 5:02 PM | Report abuse

The whole co-op concept is bad-faith bargaining. As Conrad describes them, co-ops are little different from mutual structured health plans, a tax status distinct from nonprofit and for-profit in that the policy-holder's policy is his ownership stake in the company, and excess profits accrue to him or her, or may be redirected by proxy. At present, 12 of the 38 local Blue Cross and Blue Shield plans are classified as mutuals, and there are a number of other non-Blue mutuals as well.

So Conrad and those who support him are trying to buy off the public plan supporters by offering something you already have. How nice.

If you really want a public plan -- and I'm not saying I do -- you should not be suckered by this co-op BS. It's a shiny object for you to peck at so they can distract you from the robbery going on elsewhere.

Posted by: Rick00 | June 22, 2009 5:24 PM | Report abuse

That second thing.

Posted by: eRobin1 | June 22, 2009 6:22 PM | Report abuse


It’s official. America and the World are now in a GLOBAL PANDEMIC. A World EPIDEMIC with potential catastrophic consequences for ALL of the American people. The first PANDEMIC in 41 years. And WE THE PEOPLE OF THE UNITED STATES will have to face this PANDEMIC with the 37th worst quality of healthcare in the developed World.


We spend over twice as much of our GDP on healthcare as any other country in the World. And Individual American spend about ten times as much out of pocket on healthcare as any other people in the World. All because of GREED! And the PRIVATE FOR PROFIT healthcare system in America.

And while all this is going on, some members of congress seem mostly concern about how to protect the corporate PROFITS! of our GREED DRIVEN, PRIVATE FOR PROFIT NATIONAL DISGRACE. A PRIVATE FOR PROFIT DISGRACE that is in fact, totally valueless to the public health. And a detriment to national security, public safety, and the public health.

Progressive democrats and others should stand firm in their demand for a robust public option for all Americans, with all of the minimum requirements progressive democrats demanded. If congress can not pass a robust public option with at least 51 votes and all robust minimum requirements, congress should immediately move to scrap healthcare reform and demand that President Obama declare a state of NATIONAL HEALTHCARE EMERGENCY! Seizing and replacing all PRIVATE FOR PROFIT health insurance plans with the immediate implementation of National Healthcare for all Americans under the provisions of HR676 (A Single-payer National Healthcare Plan For All).

Coverage can begin immediately through our current medicare system. With immediate expansion through recruitment of displaced workers from the canceled private sector insurance industry. Funding can also begin immediately by substitution of payroll deductions for private insurance plans with payroll deductions for the national healthcare plan. This is what the vast majority of the American people want. And this is what all objective experts unanimously agree would be the best, and most cost effective for the American people and our economy.

In Mexico on average people who received medical care for A-H1N1 (Swine Flu) with in 3 days survived. People who did not receive medical care until 7 days or more died. This has been the same results in the US. But 50 million Americans don’t even have any healthcare coverage. And at least 200 million of you with insurance could not get in to see your private insurance plans doctors in 2 or 3 days, even if your life depended on it. WHICH IT DOES!

Contact congress and your representatives NOW! AND SPREAD THE WORD!

God Bless You


Posted by: JackSmith1 | June 22, 2009 6:40 PM | Report abuse

The real crime is President and Congress Democrats are unable to make the ‘political capital’ of such Republican opposition to any plan competing with ‘for profit’ private insurances. Where is that ‘famed’ political genius of Axelrod, Rahm and Jarrett? What are President’s political guys doing here? Just giving this match to Republicans?

Posted by: umesh409 | June 23, 2009 1:01 AM | Report abuse

"Are Republicans in this to preserve the healthy functioning of a competitive private market or preserve the profits of the currently dominant insurance companies?"

You MUST be joking. Why do you have this job if you're asking "an interesting, and potentially clarifying, question" like that?

The answer is yes. Did you really not know that?

Posted by: cab91 | June 23, 2009 12:02 PM | Report abuse

If you are uninsured and does not have insurance, you should check out the website - John Mayer, California

Posted by: daniellezito2506 | June 24, 2009 6:15 AM | Report abuse

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