If It’s Government Funded, It’s Not A Co-Op
The New York Times’ Robert Pear and Gardiner Harris have a front page story in the August 18th New York Times on Sen. Kent Conrad’s (D-ND) proposal to increase health insurance competition through nonprofit health care cooperatives. Pear and Harris write:
Prof. Ann Hoyt, an economist at the University of Wisconsin-Madison, who has done extensive research on cooperatives in many industries, said they could serve a useful purpose in health care — just as credit unions compete effectively with banks, prompting them to offer higher interest rates on deposits and lower rates on loans.
In a study published in March and financed in part by the federal government, Professor Hoyt and other researchers at the University of Wisconsin identified nearly 30,000 cooperatives with revenues of more than $650 billion a year. They include farm co-ops, retail food co-ops, rural telephone and electric co-ops and credit unions — entities as diverse as Ace Hardware, The Associated Press, Blue Diamond Growers (almonds), Carpet One, Land O’Lakes (dairy products), Ocean Spray (cranberries) and Sun-Maid Growers (raisins).
Mr. Conrad, appearing this week on “Fox News Sunday,” said the idea of a co-op was gaining traction. “It’s not government-run and government-controlled,” he said. “It’s membership-run and membership-controlled, but it does provide a nonprofit competitor for the for-profit insurance companies.”
But Pear and Harris fail to mention that Conrad left out a third major defining element of co-ops: they are not funded by the federal government. None of the co-ops studied by Prof. Hoyt (Ace Hardware, The Associated Press, Blue Diamond Growers, etc.) got their start up capital from the federal government. And neither did the credit unions that Prof. Hoyt mentions early in the NYT story. But Conrad’s co-op proposal would do just that.
Pear and Graves report that Conrad’s proposal “Muddies Debate” on the public option. If so, then the press has an obligation to define the terms of debate as accurately as possible. And a plan along the lines of what Conrad is proposing is little different than Obama’s public option. CATO’s Michael Cannon explains:
It makes no difference whether a new program adopts a “co-operative” model or any other. The government possesses so many tools for subsidizing its own program and increasing costs for private insurers—and has such a long history of subsidizing and protecting favored enterprises—that unfair advantages are inevitable.