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White House Open to Co-ops in Lieu of Public Option

It’s no news that the Obama administration has pushed hard for the creation of a public-plan option to accompany whatever health care reform overhaul the Democrats come up with this year. But Nancy-Ann DeParle, director of the White House Office of Health Reform, has just softened that stand.

In an interview with Bloomberg Television airing Friday, DeParle indicates that the White House “would be interested in” an alternative proposal that would create health cooperatives in lieu of the public option — as long as the co-op model is shown to inject additional competition into the insurance market.

Obama has said in the past that he won’t hinge his support for the larger health reform bill on the inclusion of the public option, but DeParle’s openness to the co-op strategy is the most specific indication that the administration won’t insist on a government-backed plan.

Her words appear to align the White House roughly with the sentiments of House Majority Leader Steny Hoyer (D-Md.), who told reporters last week that he’d also be receptive to the creation of co-ops.

“After all,” Hoyer said, “a co-op will be a competitor.”

But that’s bad news for many liberal lawmakers and patient advocates, who argue that the public option is the only way to create a nationwide patient pool large enough to compete with the giants in the private insurance industry, thereby keeping them honest with respect to cost and coverage.

Writing for The New Republic in June, Yale political scientist Jacob Hacker argued that there are three unique advantages to the public option approach: It would (1) be a backup when patients had no other affordable coverage options (for example, when employers don’t offer coverage); It would (2) provide a benchmark to make sure private insurers offer comprehensive coverage; and it would (3) create a backstop preventing doctor and hospital costs from creeping up, as often happens in areas where health care providers consolidate their operations. The co-op approach — being championed by Sen. Kent Conrad (D-N.D.) — wouldn’t accomplish all of these goals, Hacker wrote.

Cooperatives might be able to provide some backup in some parts of the nation, but they are not going to have the ability to be a cost-control backstop, much less a benchmark for private plans, because they are not going to have the reach or authority to implement innovative delivery and payment reforms. And so Conrad’s idea appears to be yet another compromised compromise that cuts the heart out the idea of public plan choice on the alter of political expediency.

It might not matter. Conrad, one of six Finance Committee members in contentious negotiations over how to structure that panel’s overhaul blueprint, told The Washington Post this week that, considering the conservatives’ opposition to the public plan, the inclusion of that option would sink the bill in the Senate, where 60 votes are required to pass almost anything these days.

“The hard reality is . . . that a public option does not have enough support in the Senate to pass,” Conrad said.

He doesn’t mention if he would be among the “no” votes.

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