The Heritage Foundation - Leadership for America

Last month, Senator Kent Conrad (D-ND) suggested that maybe some form of “consumer cooperative” might be a politically acceptable alternative to the “competing public plan” idea. Since then, growing opposition to the “public plan” has fueled growing interest among Sen. Conrad’s colleagues in his “co-op” idea.

However, as with the various other “compromise” ideas now floating around Congress, what really matters is the contents of the package– not the words on the label.

If by health care “co-op,” Congress means allowing private associations to collectively buy health insurance for their members or operate a health insurance exchange, or allowing people to buy health insurance from a non-profit, member-owned private insurer, then those would be positive, pro-consumer developments.

However, simply slapping the word “cooperative” onto a new “insurer,” but then specifying that the government — not the policyholders — picks the board of directors (as Sen. Schumer wants), or that taxpayers will subsidize it, or that it has to pay doctors and hospitals at Medicare rates, would just be an exercise in trying to disguise a “public plan.”

The most positive outcome for the health insurance co-op idea would be if Congress amended the tax-code to allow member-owned health insurers to operate as non-profits, just as decades ago Congress authorized non-profit, member-owned credit unions. America has a long history of member-owned cooperative insurers — known as “mutual” insurers — offering life, auto and property insurance. Indeed, some of them are large and well known, such as Mutual of Omaha, or Northwestern Mutual Life. Offering the option of the same kind of direct consumer-ownership in health insurance not only makes sense, but might also prove to be quite popular.