Critics: Co-ops Are Disguised Public Plan

Opponents of healthcare reform are aiming to kill a delicately negotiated compromise on a nonprofit insurance plan before its final version is released after the recess.

Some conservative groups are instructing their members that nonprofit healthcare co-ops, first proposed by Senate Budget Chairman Kent Conrad, are synonymous with the government-administered public option opposed by Republicans.

Conrad is among the “Gang of Six” healthcare negotiators on the Finance Committee, which has yet to release its draft.

Organizations such as FreedomWorks, which is encouraging its members to participate in town hall meetings, has distributed talking points describing the co-op concept as a rebranding of Democratic aspirations to create a single-payer healthcare system.

“Some are now referring to a “Co-Op” plan to continue hiding the actual details of this big government legislation,” said a planning document distributed to FreedomWorks activists.

In addition, a loose-knit group of conservative leaders circulated a memo last week describing the co-op proposal as “a stalking horse” for government-run healthcare insurance.

Former Rep. David McIntosh, R-Ind., co-founder of the Federalist Society and one of the Republican activist leaders who signed the memo, said that Republicans are prepared to oppose any proposal that could be perceived as a step toward a public option. If the Finance draft has a strong co-op provision, “conservatives will say that will lead to government-run health care, and we will oppose it,” said McIntosh.

Conrad has sought to underscore key differences between the public option, favored by House Democrats, and the co-ops, which he argues will cut costs to consumers by operating as not-for-profit organizations.

Under his plan, co-ops would receive federal seed money in the form of grants or loans, but the money would be limited and the co-ops would be required to become self-sustaining. They would be administered by an elected board.

The idea is under fire from both sides of the aisle. Senate Finance Health Subcommittee Chairman John (Jay) Rockefeller, D-W.Va., a champion of the public plan, has challenged the effectiveness of independently operated cooperatives. Business groups such as the National Federation of Independent Business and the U.S. Chamber of Commerce oppose the public option in the House version but have yet to weigh in on the co-op proposal, citing the lack of details.

The Chamber, which today launched a multimillion-dollar ad campaign to oppose Obama’s plan, last week urged the Finance Committee to complete bipartisan negotiations.

Several business lobbyists said the proposal could offer an acceptable compromise if the co-ops are subject to the same regulatory hurdles as private insurers and do not enjoy preferential treatment from federal decision-makers.

But many conservatives remain wary that Democrats will mold any compromise to tilt the playing field in favor of the co-ops, driving private insurers out of the market and rendering the remaining nonprofit healthcare networks unwieldy and inefficient.

A spokeswoman for Americans for Prosperity, another group dispatching activists to town hall meetings, said her group sees the co-op proposal, the public option and various mandate proposals as different names for the same thing: an increased government role in how healthcare decisions are made.

FreedomWorks policy director Max Pappas said that Conrad’s co-op idea would create a system akin to the government-chartered mortgage giants that imploded. “This has the potential to do to health care what Fannie Mae and Freddie Mac did to housing,” he said.