Monday, August 17, 2009

The Word of the Day is Waffle

Much like his Democratic predecessor Bill Clinton, it looks like Obama's public option has hit the proverbial fan. A President of big aspirations and a big mouth has finally succumbed to political reality:

Bowing to Republican pressure and offering political cover to fiscally conservative Democrats, Obama's administration signaled on Sunday that it is ready to abandon the idea of giving Americans the option of government-run insurance.

While H.R. 3200 is still on the table, and while much of the talk on Sunday was rather vague, the political realities are striking. Obama's support for health care reform has plummeted, and without some kind of compromise on what is the most complicated and emotional issues in American politics, Obama could see his "mandate" turn into irrelevance (much like when Bush tried his hand at Social Security reform).

The potential alternative? Well, it looks like there is much talk about "co-ops" at the moment:

Under a proposal by Sen. Kent Conrad, D-N.D., consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own.

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government. They would be required to maintain the type of financial reserves that private companies are required to keep in case of unexpectedly high claims.

Not quite sure what this is supposed to mean yet, or how such a "co-op" is to be organized:

The government would offer start-up money -- Conrad said $6 billion would be needed -- in loans and grants to help doctors, hospitals, businesses and other groups form nonprofit cooperative networks to obtain and provide healthcare.

The cooperatives could be formed at the national, state and local levels. A temporary government board would help get things started. Conrad said only about 25,000 members would be needed to make a cooperative financially viable. But in order to negotiate competitive rates with health providers, a cooperative would need at least 500,000 members, he said.

Co-op membership would be offered through state insurance exchanges where small businesses and individuals without employer-sponsored plans would shop for health coverage.

The co-ops would function as a mutual insurance company where policyholders would have some ownership rights. Conrad said co-ops could quickly bring health insurance to some 12 million people, which would make this the third-largest insurer in the country.

Co-ops are less likely to bring down health care prices as much as a public option (though we will be paying the difference in taxes), but I'm all for competition. However, there still remain huge obstacles to the price problem which are not addressed as of yet in H.R. 3200. Some possible issues with co-ops?

Many Democrats worry that co-ops would be too weak to provide any real competition to the private insurance industry. Public plan advocate Senator John Rockefeller points out that healthcare cooperatives have been tried in the past to provide medical care to rural areas. Thousands were formed and almost all of them failed.

Conservative critics argue that the co-operatives would just be another form of government-run insurance because of the role the government would play in setting them up and overseeing their operations.

I agree with both. Like I said before, there is much more to be done about lowering the price of health care. Hopefully, with the public option out of the arena, more attention will be paid to cost reduction, competition, and consumer choice.

Health care needs to be private, individual (not tied to employment), portable, and deregulated. There is also an inherent problem with the insurance system in the first place which has driven up prices as demand for gratuitous services has spiked.

One thing is for certain: I'm glad that Obama has been stopped in his tracks for now, so we can have more time to research our options and discuss alternatives, instead of steam-rolling "reform" over a confused and unwilling American populace. However, with Obama and the Democrats waffling, and the balance of power leaving credence in the hands of Republicans, it is unclear where the debate will go from here and how far back the administration is willing to backpedal.

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