• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Don't Fall for The Co-Op Co-Opt

    President Barack Obama’s desire for government-run health insurance, aka the “public option,” is threatening to kill health care reform. Now some Senators are floating a “compromise” plan that would create cooperative plans as an alternative to a government-run public plan. True co-ops have a long and proud tradition in many sectors of the U.S. economy, including health care. But the plan currently being floated in the Senate takes the co-op concept in the wrong direction. The Washington Post reports:

    In its place, the draft circulated yesterday outlines a co-op approach modeled after rural electricity and telecom providers, subject to government oversight and funded with federal seed money.

    Federal funding and regulation are a recipe for health care co-op disaster. Heritage fellows Edmund Haislmaier, Dennis Smith, and Nina Owcharenko explain:

    Senator Charles Schumer (D-NY), a supporter of a public plan, introduced his key principles on a co-op system that go in the wrong direction and would end up with a federally run public plan in all but name. He states that a co-op must be national in scope, it must secure significant federal start-up funding, and it must be run by federal officials appointed by the President.

    here are “co-op” models that are the wrong way to provide health care and should be unacceptable to lawmakers, such as Senator Schumer’s thinly veiled public plan version. Simply calling some form of a government-sponsored enterprise (GSE) a “cooperative,” for instance, would be only another type of public plan in disguise.

    One need look no further than Fannie Mae and Freddie Mac to see how GSEs can distort the market and leave taxpayers with huge liabilities. Decades of market distortions generated by their implicit government backing, compounded by the effects of repeated political meddling by Congress, put those GSEs at the very epicenter of the mortgage market collapse that triggered the current financial crisis and recession. Furthermore, that GSE approach has now saddled American taxpayers with hundreds of billions of dollars in liabilities for just Fannie and Freddie alone–not counting the additional costs of the follow-on effects that their market-distorting practices produced in the rest of the financial system.

    If Senators believe co-ops are the right way to reform health care, then they need to get the government out of the way of their creation. Haislmaier, et al, again:

    Some argue that federal involvement is necessary to organize, regulate, and “jumpstart” co-ops financially in the health sector. However, what is actually needed to allow health co-ops to flourish is for the federal government to remove barriers in the marketplace–most importantly itself.

    If Congress wants to provide Americans access to health co-ops, it would need to make it possible for an institution to combine tax-exempt (non-profit) status with mutual insurance status, something health plans cannot do today. Congress should allow mutual health insurance companies to form based on the credit union model. Under this model, Congress would simply grant non-profit status to mutual insurance companies, justified by the “member benefit” they provide.

    Very likely, with this form of health care arrangement possible, various non-profit memberships and other organizations might link with a health co-op to make coverage available. State farm bureaus or consortia of churches, for instance, could establish such co-op health insurance.

    In addition to these steps, addressing the tax treatment of health plan benefits in the individual tax code would help spur co-ops. If families could receive the same tax relief for joining a co-op–or any other free-standing health plan–as for enrolling in an employer-sponsored plan, there would be new options for the uninsured or underinsured.

    Posted in Obamacare [slideshow_deploy]

    21 Responses to Don't Fall for The Co-Op Co-Opt

    1. Ozzy6900, CT says:

      Let me reitterate:

      The Federal Government runs Social Security.

      The Federal Government runs Medicare.

      The Federal Government runs Veteran's Administration.

      The Federal Government runs 1/3 of the automotive industry.

      The Federal Government runs itself!

      Show me one and I mean ONE of the above that runs properly and I will personally assist President Obama in securing a national HealthCare System.

      I have nothing to worry about.

    2. ART CORDOVA says:

      The cost to maintain Universal Health will eventually exceed the 1.6 Trillion. How the government feels they have the right to tax those who are happy with their healthcare is ridiculous. How can he can take money out of the hands of those who stimulate the economy to provide healthcare to those who drain the economy. Will someone please tell him and his disciples that they will loose their next elections if over 100 Million people with strong healtcare insurance start getting taxed for no good reason!!!

    3. J.C. Hughes, Texas says:

      The Beltway demagogues truly believe they're the nation's only able economic life support. Such overbearing control is truly pathological. The fact is, they're strangling the economy with their destructive and unnecessary interventions. The basic rule in medicine is to do no harm. Time for big government to step away [some tax relief would be helpful] and allow free markets to breath.

    4. J.C. Hughes, Texas says:

      My message to the current president, show the nation some damn leadership.

    5. Wingnutz says:

      Show me one that runs worse than AIG, Citigroup, GM, etc., genius.

    6. Loretta , Colorado says:

      Nuff Said!

    7. tom-Denver, Colorado says:

      The Federal Government also runs the Post Office, the National Highway System, and Medicare all of which run very well and very successfully. I demand that the Congressional leaders recognize that 76% of the American people want a public option to be included in the Healthcare Bill, we're tired of being screwed over by the Insurance Companies with their "pre-existing conditions", and their scams to avoid paying to help patients out…If people can take to the streets in Iran a non-Democratic country, we certainly can and will if the healthcare bill does not include a public option!!

    8. J.C. Hughes, Texas says:

      Obviously, the current administration has their misguided cheering section. Dream on folks. The path being cut by today's congressional leadership and their man Obama is headed for a high cliff. Follow if you will. But be prepared for the worst.

    9. Pingback: » Financial News Update - 06/19/09 NoisyRoom.net: “Extremism in the defense of liberty is no vice. Moderation in the face of tyranny is no virtue.” Barry Goldwater

    10. Barb -mn says:

      Wingnutz writes:

      Show me one that runs worse than AIG, Citigroup, GM, etc., genius.

      One what, Wingnutz? Most every crisis in the private sector was derived by the government. Set-up by the government.

      tom, elderly and military, should get the best care at no cost. Everybody elses health is personal and so should be the cost & responsibility. The government can do the job to oversee, but stay out of the business. The governments only interest in providing health insurance, is power, control and profit!

      Everything else you mentioned is public service for all. National highway system employs illegal immigrants. Potential conflict of interest to safety issues. Who knows who the government hires to work at the post office and who may be doing what with anyone's personal information?

      Please don't weaken yourself to believe the government should be responsible to make peoples personal choices. That's removing liberties.

      All who want government run health care are putting everyone, including themselves, in danger. Government requires little from those they hire and the people deserve the best. You won't see or have that in government run of anything.

    11. Lebo, florida says:

      Government run health care? Is this a joke? I wouldn't want the government to paint my shed, let alone run my healthcare plan. It's all about Power.

    12. Suzi, Florida says:

      Tom, do you realize that Medicare will have to begin dipping into its trust fund this year to keep up with expenditures and will go broke by 2019 without changes in a program that is swelling because of rising health costs?

      The United States Postal Service is in danger of going broke, postmaster general John Potter has warned. News reports say he claims the post office may run out of money by the end of the year if it does not get aid. He said it is ‘facing losses of historic proportion’ and added:?“Our situation is critical.”

      I can think of no government run program that hasn't ended in chaos.

      As a former patient of military medical care facilities, I can assure you that government health care is not in any way comparable to what we currently have available in the private sector.

      Please do some research to learn both sides of these issues. Thank you.

    13. Matt Stump - Indiana says:

      Tom in Denver – I highly question that 76% of Americans want a public plan. Where was this number cojured up? The National Highway Fund is bankrupt. Medicare only survives due to automatic annual budget increases that outpace inflation. The Postal Service operates at a loss and is looking to cut service all the while increasing postage rates every year or so. Wake up. The government CAN NOT run programs efficiently.

    14. Ben C, Ann Arbor, MI says:

      Show me anywhere in the U. S. Constitution that citizens have the "right" to health insurance. At what point has it become an entitlement?

      Why is it that veterinarians provide the same care as physicians with their total costs a tenth of that in human medicine?

    15. David E Aldridge, Da says:

      This is not about providing health care for anyone. This is all about power and getting re-elected by the dumb and uneducated, "look what I've done for you!" He's going to make a fine used car salesman in about four years, I hope and pray.

    16. Glenn, Aiken, SC says:

      De Tocqueville said it over 100 years ago. Democracy will survive until the politicians learn they can bribe the people with their own money.

    17. Kevin, Addison,TX says:

      It is beyond me how the members of congress can sit back and strap all of the hard working Americans with more debt. All they are doing is encouraging the lazy to stay lazy, by giving them something for nothing. They need to remember that their families will be affected by this if this bill is passed.

    18. John Clancy Wyandott says:

      There is much concern about the COST of health care, but little reference to the overstepping of government in the present system. The left wants the government to pay more to help the government, just as they propose stimulus to stimulate the stimulus. What drug is it that prompts this thinking?

      If we look at the QUALITY of government health programs in the U.K. and Canada, we see long lines often provoking long drives (Windsor to London, Canada, for example), unattractive pay for doctors and nurses that drives down care, and worst of all, decisions made by impersonal officials and rules rather than the family, the patient, and the doctor.

    19. Lynn B. DeSpain says:

      If Obama and his kith are for it, I and my kin are against it! The reason being, we are not that stupid, not that easily lead, and do not believe that the Constitution guarantees the right anything but Life, Liberty and the "Pursuit" of Happiness. We do not believe in entitlements, or handouts, just because you're different, or poor, odd, sexually confused, or lazy. Anyone can find work anywhere to feed themselves, that's called Honor. Anyone, any animal, bug, or virus, can make babies, but if you do, you had best be willing to do all that you can to take care of them, you made them, your responsibility, your Honor.

      America has Religious Programs to help the truly helpless and to feed the real hungry, but we, America, have somehow become a Nation where "Handouts have somehow become someone's right! Wrong! That is just plain Stupid! All that will get you is a vote if you are a politition, otherwise, it is just money out of your family's pocket into someone else's who did not earn it, and was not seen even a Charitable to deserve it! Nope, I don't wnat the Government having anything to do with Healthcare, or anything that could potentially affect me and mine. We earned that Right! Nobody earns anything by doing nothing.


    20. Marshall Hill MI. says:


    21. cel adirondack new y says:

      well- thats it boys- take away one of our rights to choose- you people are idiots if you think that leaving multibillion dollar industries in charge of your health care is a good idea- wait until you are really sick or old- and middle or lower class- that will really educate you….

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.