Old-fashioned co-ops get new focus

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A centuries-old way of doing business is taking center stage on Capitol Hill as a cutting-edge and potentially politically viable alternative to the government-run health insurance plan long preferred by President Obama.

Cooperatives, first organized in the 18th century, are being considered in the health care reform debate after the Obama administration signaled Sunday that it isn’t wedded to the taxpayer-funded public plan, once considered by Democrats as essential to any substantial health care package.

The suggestion that Mr. Obama was ready to drop the taxpayer-funded public health insurance plan sparked a sharp reaction from many Democrats on Monday, even as the interest in the co-op alternative model was soaring.

Some liberal Democrats warned that they would not support a bill without the taxpayer-funded public plan.

“A public option is the best option to lower costs, improve the quality of health care, ensure choice and expand coverage,” said House Speaker Nancy Pelosi, California Democrat.

Rep. Raul M. Grijalva, co-chairman of the Congressional Progressive Caucus, said he would not support a bill without the public option. Former Vermont Gov. Howard Dean, a physician who is also a leading progressive voice in the reform debate, said reform without a public plan is not worth it.

Under the cooperative business model, individuals organize into a nonprofit collective to gain greater bargaining power in the market.

In the case of health care co-op, people from a specific state or region would band together and act essentially as their own insurance company. The co-op would determine what kind of coverage members want their plan to include and would negotiate rates with health care providers. The nonprofit co-ops would compete alongside private plans and would not be a collection of insurance companies.

Most of the cooperatives familiar to Americans - such as Land O’Lakes Inc., Welch’s, Sunkist and Ocean Spray Cranberries Inc. - are owned and run by farmers. The model closer to what the health insurance program would look like is a credit union, said Paul Hazen, president and chief executive officer of the National Cooperative Business Association, the leading co-op trade group.

“The purpose of the co-op is to provide economic benefit to the people using it - not to maximize profits,” he said. “It’s particularly successful in providing services or generating income when the market fails.”

The cooperative model has gained increasing traction in recent weeks as the political difficulties of passing a bill in the Senate have become more apparent.

Sen. Kent Conrad, a North Dakota Democrat involved in negotiations on a bipartisan Senate bill, has crafted the co-op plan as an alternative to a government-run insurance plan.

Obama administration officials said they were open to the co-op proposal on the Sunday talk shows as opposed to the government-run plan, which is opposed almost unanimously by Republicans.

But even in the Senate, some Democrats on the Finance Committee have voiced skepticism over the co-op proposal and the idea of dropping the public insurance option.

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