Progressive economists' critiques missing from coverage of "compromise" health co-op plan

Numerous media figures and outlets have characterized Sen. Kent Conrad's (D-ND) cooperative health insurance proposal as a "compromise," "hybrid," or bipartisan "alternative" to a public insurance option without noting the view by progressive economists that a public option is necessary for health care reform to be successful and that any departure from that will result in the failure of reform efforts. Indeed, these economists dispute suggestions that Conrad's co-op proposal is a plausible midway point between competing methods of addressing health care reform, because they say it precludes a fundamental component of effective reform: bargaining power against the health care industry.

For example, former Clinton Labor Secretary Robert Reich and University of California-Berkeley professor Jacob Hacker say that the co-op proposal will not achieve key health care goals that can only be achieved through a public plan. In a June 11 post to The American Prospect's blog, Tapped, Reich described the co-op proposal as a "bamboozle" and said "[n]onprofit health-care cooperatives won't have any real bargaining leverage to get lower prices because they'll be too small and too numerous. Pharma and Insurance know they can roll them. That's why the Conrad compromise is getting a good reception from across the aisle." He continued:

The truth is that there's only one "public option" that will truly bring down costs and premiums -- one that's national in scale and combines its bargaining power with Medicare, and is allowed to negotiate lower drug prices and lower doctor and hospital fees. And that's precisely what Pharma and Insurance detest, for exactly the same reason.

Whatever it's called -- public option or chopped liver -- it has to be able to squeeze Pharma, Insurance, and the rest of the medical-industrial complex. And the more likely it is to squeeze them, the more they'll fight it. And the greater the opposition from Republicans, and from Dems who either believe any bill has to have some Republican support or who have sold themselves out to the medical biggies.

As long as single-payer is off the table, then we need a real public option. Don't be fooled by labels. Demand the real thing.

Similarly, in a June 14 post to The New Republic's blog, The Treatment, Hacker argued that Conrad "has offered no reason to think that the cooperatives he envisions could do any of the crucial things that a competing public plan must do." Hacker continued:

An easy way to think of the public plan's functions is the three "B"s: We need a national public plan that is available on similar terms in all parts of the nation as a backup. This plan has to have the ability to improve the quality and efficiency of care to act as a benchmark for private insurance. And it has to be able to challenge provider consolidation that has driven up prices to serve as a cost-control backstop.

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.

Hacker also explained why a "national cooperative" model would not be an adequate substitute for a public option:

[A] national cooperative would still fall so dramatically short of a public plan that it would only be attractive in addition to a national public plan, not as a substitute for it. Indeed, this point holds more generally. Given the need for countervailing power in the health care market, the federal government should encourage a range of consumer-oriented health plans and state-based public plan options, so long as there is also a national public plan capable of being a backup, benchmark, and backstop.

But despite the fact that many proponents of a public insurance option take the position that health care reform will be ineffective without it, the media regularly ignore this position. For example:

• During the June 18 edition of MSNBC's Andrea Mitchell Reports, USA Today Washington bureau chief Susan Page asserted that the public option "is a deal-breaker for Republicans and that's a big problem. [Sen.] Max Baucus [D-MT], the Senate Finance Committee chairman, is trying to bridge this divide." Host Savannah Guthrie then said the "public option is really the breaking point" and asked Page: "Is there a compromise position? I mean, we know about Senator Conrad's idea of a co-op, which I suppose they would try to fashion to kind of look and sound like a public option without having the government involved. I mean, is there a potential of a compromise there?" Page replied, in part: "Sure, that's one potential compromise."

• On the Fox Business Network on June 16, co-host David Asman said of the co-op proposal: "There is some bipartisan support here." Correspondent Trish Turner replied, in part, that lawmakers are trying "figure out whether you quash the public option altogether, which will enrage the left, or you try to get some Republican support and moderate Democrat support with a hybrid plan like this, perhaps the government setting up a co-op plan."

• In a June 15 USA Today article, "Debate over Obama health care plan intensifies," reporter John Fritze asserted that "[o]ne variation" of the public plan, "proposed by Sen. Kent Conrad, D-N.D., is the creation of a non-profit cooperative managed by its membership. Because it would not be run by the government, the co-op could offer a compromise to attract the 60 votes needed to overcome a filibuster and take a final vote in the Senate, Conrad said."

• During the June 15 edition of MSNBC Live, co-host David Shuster asked NBC chief White House correspondent Chuck Todd: "On the issue of sort of trying to compromise on this issue -- the public option -- regardless of what the doctors' groups do: We heard from a Democratic Senator Conrad over the weekend who said that the votes are simply not there to essentially stop a filibuster in the public option. What's been the reaction from the White House? What do they make of the political equation at this point?" Todd responded, in part: "There's now this momentum, it appears, among -- particularly among some of the more conservative Democrats in the Senate, for this idea of a co-op ... a nonprofit public health care cooperative that could be a way of filling this gap."

• During the June 15 edition of MSNBC Live, Guthrie said of the public option that "Republicans, some Democrats, [are] against it. So, we'll just have to see what form it takes. There is room for compromise. You just mentioned the co-op idea, which is something offered by a Democrat, Senate Budget chairman Kent Conrad. That may be a compromise that folks can live with that would satisfy the White House."

• A June 14 Associated Press article, "Officials voice no support for health benefits tax," asserted that "Republican lawmakers have called the [public health insurance] proposal a 'nonstarter'," and that Conrad "is proposing a compromise plan that would set up membership-based cooperatives using government help but not run by the government."

• In a June 12 Los Angeles Times article, "Obama promotes healthcare overhaul in Green Bay, Wis.," Noam N. Levey asserted that "Republicans strongly oppose the [public plan], saying it would drive private insurers out of business, leaving Americans with no option but government health coverage." He went on to note opposition from the insurance industry and U.S. Chamber of Commerce, and reported that "[s]everal centrist lawmakers are working on compromise proposals. One by Sen. Kent Conrad (D-N.D.) would set up cooperatives for insurance similar to those that deliver electricity to many rural parts of the country." Levey added that Baucus "signaled Thursday that Conrad's proposal could form the basis for a bipartisan compromise on his panel."

• In a June 12 Wall Street Journal article, "Obama Stumps for a Public Insurance Option," Laura Meckler reported that "Republicans and many industry groups are fiercely opposed [to the public plan], saying it would inject too much government control," and described "nonprofit health insurance co-operatives" as an "alternative" to the public plan.

• During the June 12 edition of CNN's The Situation Room, host Wolf Blitzer said "health co-ops ... seem to be designed to bridge the gap between the left and the right." In her subsequent report, congressional correspondent Brianna Keilar asserted that "the co-op could hold the key to bipartisan agreement on health care reform, a bridge between Democrats who want a government- run insurance option to compete against private insurers, and Republicans who say the government needs to stay out of it."

• In a June 11 New York Times article, "Obama Takes His Health Care Case to the Public," Sheryl Gay Stolberg and Robert Pear reported that Obama "vigorously defended his call for a government-sponsored health plan to compete with private insurers. But back in Washington, a leading Senate Democrat seemed to be looking for a compromise that would limit government involvement." They later explained that Baucus said "the public plan could take the form of an insurance cooperative," and added that "[t]he idea of creating health insurance cooperatives was first floated as a possible compromise by Senator Kent Conrad, Democrat of North Dakota."

• During the June 11 edition of CNN Newsroom, anchor Heidi Collins teased a report by correspondent Elaine Quijano, saying in part: "Democrats on Capitol Hill are looking for possible ways to reach a compromise on a reform bill just as hearings get under way in the senate." Quijano went on to describe Conrad's co-op proposal, asserting that "[t]he idea here, really, is to provide an alternative to a government-run plan and that really has been the sticking point for Republicans."

From the 1 p.m. ET hour of the June 18 edition of MSNBC's Andrea Mitchell Reports:

GUTHRIE: The battle lines are officially drawn on the president's plan to overhaul the health care system. And Republicans are in some sticker shock over the trillion-dollar-plus price tag. Today, the bill is being marked up by a key Senate committee, but there's virtually no chance, they say, anymore that lawmakers are going to be able to meet the president's August deadline.

Susan Page is USA Today's Washington bureau chief. Susan, the Senate Finance Committee had hoped to produce a draft, I think, this week and that that's not going to happen. How serious is this delay? Is it just a bump in the road or does it portend something more serious?

PAGE: You know, we've had months where everybody's talked, in very glowing terms, about the prospects for finally getting health care reform --

GUTHRIE: Yeah.

PAGE: -- through this year. I think this is the week where that got called into question. You know, two big problems: one is, how do you pay for it? That's still not clear. Your own poll shows some questions about the way to get the most money -- people opposing that idea.

And the second thing is the government's role, this idea of a public option. Your poll shows that most Americans really want a public option, but that is a deal-breaker for Republicans and that's a big problem. Max Baucus, the Senate Finance Committee chairman, is trying to bridge this divide. He'd hoped to have a bill out tomorrow. That's not going to happen.

GUTHRIE: So, I mean, the public option is really the breaking point. Is there a compromise position? I mean, we know about Senator Conrad's idea of a co-op, which I suppose they would try to fashion to kind of look and sound like a public option without having the government involved. I mean, is there a potential of a compromise there?

PAGE: Sure, that's one potential compromise. It created a big buzz when he unveiled it about a week and a half ago. You know, there are other ideas that could kind of try to split the difference. You could have a public option that only gets triggered after two years, say, and if the private insurers had not met what you'd hoped they would do in terms of insurance. That's an idea Senator Snowe from Maine has talked about. So, there are ways to try to give everybody a little something.

The question is: Do Republicans want a health care bill to pass? And if they basically don't, what then do Democrats do? Do they go to reconciliation, that kind of arcane process that means they could pass a bill --

GUTHRIE: Right.

PAGE: -- with just Democratic votes, but, of course, then they own health care reform in a big way.

GUTHRIE: Exactly. Now you mentioned the poll and I just want to pull it up: It showed that 55 percent of people do support that public option as part of -- well, actually, 76 percent on the public option issue, as one way to get health insurance, keeping private as well. I mean, is that something that Democrats can kind of use to say, well, wait, the public is with us on this.

PAGE: Well, they can, and Senator [Edward M.] Kennedy's [D-MA] bill includes a public option, so does the House bill they're working on. President Obama says he's very much in favor of a public option. But I think -- we heard something interesting yesterday. The former Senate majority leader, Tom Daschle, who was supposed to be the administration's point man on health care, said he was against a public option.

He says it means it'll be a divisive issue. It will prevent them -- holding on to the idea of a public option will prevent a bill from getting passed this year. And I'll tell you, everybody feels that if a bill does not get through this year, it is not going to get through later in President Obama's term.

GUTHRIE: Fascinating to wonder what might have been if Tom Daschle had been in that job, the debate we might have been having. Thanks so much, Susan Page --

PAGE: Thank you.

GUTHRIE: -- from USA Today.

From the June 16 edition of Fox Business:

TURNER: Hi, David. I guess we are definitely going to hear from Senator Mitch McConnell (R-KY) because he -- Republicans have really launched an all-out offensive -- just about, you know, I think, maybe his 11th day speaking on the floor on health care. What they really want to do is ensure that the so-called Kennedy bill that's coming out of one of the committees here does not inevitably have a -- what's called a public option or a government-run health care plan.

LIZ CLAMAN (co-host): OK. Trish, there's a question that people are asking about now, and certainly people from the other side of the aisle, the Republicans are saying that this would mean the end of private insurance for health care and that only the wealthy would get private insurances. Is that true? I mean, try and get us the real facts here of what you know.

TURNER: Well, it's tough to determine because Democrats have rather craftily left out the details from their bill. They know this is the most contentious plan. It would seem that they're going to try to cover the nation's uninsured through a massive expansion of Medicaid or Medicare. Again, the details are really sparse. They're not sure how much this is going to cost.

And as your viewers and you well know, Liz, the Congressional Budget Office, this nonpartisan budget -- this sort of budget office that counts up the scores, the price tags on these bills, just really walloped members yesterday when they hit them with -- you know, even a partial estimate of this bill puts them way outside of their expectations.

So, we still are a long way from seeing what a public insurance plan would look like. But a little funny anecdote: Senator Lamar Alexander (R-TN) -- he's in leadership here on the Republican side -- he likens the government plan as an elephant in the room with a bunch of mice, and the mice are the private insurers. And basically what the government is going to tell them is, "Now, mice, go compete."

ASMAN: Trish, the one thing that people do seem to be in agreement in, no matter what side of the aisle they're on, is -- are these nonprofit cooperatives. There is some bipartisan support here. How would these cooperatives work?

TURNER: Well, what they're modeled on, David, is they -- basically, cooperative plans that work all over the nation. This is a proposal by moderate Democratic Senator Kent Conrad. It's basically a tacit admission that public option's not favored by a lot of moderate Democrats. So you look at cooperative models like Land O'Lakes, like Ocean Spray, and what they do -- or think about New York City. You know, you guys are in New York. I mean, co-op plans are all over the place for apartment, condo buildings.

It's basically a nonprofit health care insurance plan that is run by the members. And so, you set up a board -- there's a little bit of contention about how that's set up. The government -- Democrats want the government to set it up. But it's gaining some traction. The only thing that people are a little afraid of, liberal Democrats, this bears an awfully similar -- you know, bears a resemblance to George W. Bush's health savings account. You might remember these --

CLAMAN: Yes. Yes.

TURNER: -- allows different people to buy across state lines and they say -- they look at this co-op plan and say, wait a minute, that sounds awfully familiar.

So, there's a little bit of hesitancy behind the scenes here, but these guys are in a push-me/pull-you race to try to figure out whether you quash the public option altogether, which will enrage the left, or you try to get some Republican support and moderate Democrat support with a hybrid plan like this, perhaps the government setting up a co-op plan.

CLAMAN: You know, Trish, as we watch how the markets and certain stocks sort of respond to this type of thing -- I don't know if we can get up a chart of the insurers, the big insurers, but we're looking at them. We're looking at the big pharmaceuticals; we're looking at, for example, the biotech companies. Biomedical and technical companies yesterday actually moved a lot higher.

Some of the worry is already baked into the stock, as we say here, Trish. But you've got this whole area of private opportunity that people are at least looking for, and they figure something is going to happen. You know that we will get something in some form. What would that form look like at this point?

TURNER: It's really exceedingly difficult to tell. It's -- I think that some hybrid form, if they can actually conquer this mountain, come up with a health care reform plan. And believe me, that is far from certain. This could all fall apart over the August recess, by the time we get there.

But it seems like for now, the going popular plan is some hybrid form of a co-op to compete against private insurance plans. But I'll tell you, they're really concerned about how people are actually going to find these plans and how they're going to compete. They're trying to set up a computer model very similar to the popular site Orbitz, where these exchanges, digital exchanges sort of show people and guide them toward, what's the best option for you? You put in all the things you want, just like you would on Orbitz when you're traveling, and then it sort of computes a plan that says, well, this is probably more likely what you'd want.

But there's so much that's not figured out whether you do a government option. But, also, what kind of penalties do you have? This play or pay option?

ASMAN: Right.

TURNER: What kind of penalties do you impose on employers? And the bigger question of all is: How the heck do you pay for all this?

ASMAN: Exactly. Trish Turner, in Washington -- Trish, thank you very much.

CLAMAN: Thank you.

ASMAN: Appreciate you spelling it out for us.

From the 3 p.m. ET hour of the June 15 edition of MSNBC Live:

SHUSTER: On the issue of sort of trying to compromise on this issue -- the public option -- regardless of what the doctors' groups do: We heard from a --

TODD: Sure.

SHUSTER: -- Democratic Senator Conrad over the weekend who said that the votes are simply not there to essentially stop a --

TODD: Right.

SHUSTER: -- filibuster in the public option. What's been the reaction from the White House? What do they make of the political equation at this point?

TODD: Well, look, you heard the president today make a strong case for it. You heard Vice President Biden on Meet the Press yesterday say that this is something they favor. But notice, neither one of them want to say that this -- if I don't have it; forget it. That isn't going to happen.

And how do you define what the public option is? You brought up Kent Conrad. There's now this momentum, it appears, among -- particularly among some of the more conservative Democrats in the Senate, for this idea of a co-op, which is, essentially -- you know, think about rural, electric utilities and turning something like that into health care, a nonprofit public health care cooperative that could be a way of filling this gap.

One other thing I wanted to point out, David and Tamron [Hall], is the president talked about how for every uninsured American, that is the equivalent of a thousand-dollar tax on other insured Americans. The White House would like to turn this idea that uninsured Americans, the cost of treating them, ends up a tax, and, therefore, figuring out a way to get them coverage can be seen as a tax benefit.

It's a tough sell, I think, message-wise, because you're asking -- it's almost like a bank shot. But that is some of the -- you know, this is the political posturing that you're going to see both sides in trying to handle this issue.

From the 10 a.m. ET hour of the June 15 edition of MSNBC Live:

CONTESSA BREWER (anchor): We know that there's been a plan, floated in Congress, about some kind of co-op, but it looks, at this point, like there are some staunch critics. You have, not only the doctors, but a lot of Republicans. So, how does the president, at this point, Savannah, try to come up with a compromise that everybody can get behind?

GUTHRIE: Well, you know, and even some Democrats are little bit leery of a government option, but the president has definitely made it clear that all things being equal, he really prefers there to be a government option, included in an array of different plans that would be offered by private insurers. So, while the White House won't come right out and say, this is the bottom line, and the president won't sign a bill that doesn't have a public option, he's made clear what his position is.

So, now, it's a matter of selling it, not just to the nation's doctors, which he'll do today, but also to Congress -- as you said, Republicans, some Democrats, against it. So, we'll just have to see what form it takes. There is room for compromise. You just mentioned the co-op idea, which is something offered by a Democrat, Senate Budget chairman Kent Conrad. That may be a compromise that folks can live with that would satisfy the White House.

What has been clear is, while the president has made some of his priorities clear, what he doesn't want to do is try to legislate for Congress. He's not sending up, for example, a proposed bill. He's letting Congress do its thing and will weigh in later.

BREWER: All right. Savannah, thank you.