Senate "Compromise"

Word on the street is that bipartisan Senate deal on ObamaCare would eliminate the public option and replace it with a "co-op." Here's Bloomberg:

The Senate Finance Committee is considering a system of nonprofit health-care cooperatives that would cover 12 million people and receive $6 billion in federal startup funds, Senator Kent Conrad said.

“They say that this would very early on get 12 million” people covered, Conrad told reporters in Washington today. He said the plan could be operated on a state, regional or national approach. Actuaries have said the co-ops would become the third- largest provider of insurance in the country, he said. The Obama administration hasn’t signed on to the plan, Conrad said.

The secretary of health and human services would appoint an interim board to oversee the co-ops, Conrad said.

So a new "co-op" replaces the public option. Sounds pretty harmless, right? Wrong, as Cato's Mike Tanner explains:

A “co-op” can be defined as a business owned and controlled by its workers and the people who use its services, in this case presumably the people whom it insures. In that sense, government provision of some sort of legal framework or seed money to help establish health insurance co-ops seems relatively harmless but also relatively pointless. The U.S. already has some 1,300 insurance companies. Adding a few more would accomplish…what?

It is suggested that the “co-ops” would be nonprofits, and therefore would offer better service and lower costs. But many insurance companies, including “mutual” insurers and many “Blues,” are already nonprofit companies. Furthermore, states already have the power to charter co-ops, including health insurance co-ops. In fact, health care co-ops already exist. Health Partners, Inc. in Minneapolis has 660,000 members and provides health care, health insurance, and HMO coverage. The Group Health Cooperative in Seattle provides health coverage for 10 percent of Washington State residents.

If the new co-ops operate under the same rules as other nonprofit insurers, why bother?

And there’s the rub. Supporters of government-run health care have no intention of letting the co-ops be independent enterprises. In fact, Sen. Charles Schumer (D-NY) makes it clear, for example, that the co-op’s officers and directors would be appointed by the president and Congress. He insists that there be a single national co-op. And Congress would set the rules under which it operates. As Sen. Max Baucus (D-MT) says, “It’s got to be written in a way that accomplishes the objectives of a public option.”

If a “co-op” is run by the federal government under rules imposed by the federal government with funding provided by the federal government, that is government-run health insurance by another name.