RNC Recycles False Talking Points On Co-Ops

August 18, 2009 3:50 pm ET

On August 17, 2009, the RNC released a "research" document that regurgitates the GOP's "government-run" scare tactics and outlines the ways in which a possible co-op system would be just another form of government-run health care.  However, in the usual vein of RNC "research," their support is misquoted, taken out of context, or altogether incorrect.

RNC: Co-Ops Will Be Government-Run

RNC "By Any Other Name":

"Co-Ops Would Be Funded By Federal Government. 'Senator Kent Conrad, a Democrat, proposed creating nonprofit, member-operated health cooperatives to compete with insurers ... 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.' ('Q&A - Co-Ops In Focus In U.S. Health Care Debate,' Reuters, 7/30/09)" [GOP.com, 8/17/09]

"Co-Ops Would Force Individuals Who Want To Join To Go Through State Governments. 'Co-op membership would be offered through state insurance exchanges where small businesses and individuals without employer-sponsored plans would shop for health coverage.' ('Q&A - Co-Ops In Focus In U.S. Health Care Debate,' Reuters, 7/30/09)" [GOP.com, 8/17/09]

Reality: Co-Ops Would Be Operated By Their Individual Members

When viewed together, it is apparent the full Reuters article actually painted a more thorough portrait of co-ops than what was included by the RNC.

Co-ops Could Be Started By A Temporary Government Board And Then Be Run By Small Businesses And Other Americans.  According to Reuters: "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. Conrad said co-ops could quickly bring health insurance to some 12 million people, which would make them the third-largest insurer in the country." [Reuters, 7/30/09, emphasis added]

Republicans Like Co-Ops "Because It Limits The Government's Role."  According to the Washington Times: "Supporters and opponents are divided on whether the co-ops would provide enough competition to insurance companies, which have a near-monopoly in some markets. [...] Republicans, who have shunned the idea of a public option, said Monday that they're interested in the co-op proposal because it limits the government's role, but are waiting to hear details before they decide whether to support it."  [Washington Times, 8/18/09]

RNC: Co-Ops Will Be Strictly Regulated By The Federal Government

RNC "By Any Other Name":

"Co-Ops Would Be Regulated By Federal Government. 'Advisory board makes recommendations to HHS Secretary who makes final decisions about approvals of business plans ... Business plans must meet governance standards, and eligible applicants must meet the standard for non-profit, participating mutual insurance.' ('Senate Finance Committee Draft Proposal,' 6/19/09)" [GOP.com, 8/17/09]

Reality: Co-Ops Would Receive Similar Oversight As Other Entities That Obtain Federal Funds

If co-ops are to receive government funds, shouldn't there be some level of oversight to ensure that the money goes towards plans that are well structured and provide members with the best service?  The full section of the proposal reflects these details:


[Senate Finance Committee Draft, via Washington Post, 6/18/09]

Additionally, the Washington Post piece that links to the draft proposal explicitly states that the co-ops aren't a public plan.

Washington Post: "The Co-Op Idea Isn't A Public Plan."  In a column on the Senate Finance Committee's health care reform draft proposal, Ezra Klein wrote: "The co-op idea isn't a public plan, but with federal seed money to start new co-ops, it's a good idea on its own merits. There's an individual mandate, state-based health insurance exchanges, and a substantial health and wellness initiative. Insurers are barred from discriminating based on health history and Medicaid is sharply expanded." [Washington Post, 6/18/09]

Co-Ops Aren't Meant To Turn A Profit. The Washington Times reported: "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...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." [Washington Times, 8/18/09]

RNC: Co-Ops Will Monopolize The Health Insurance Market

RNC "By Any Other Name":

"Federal Government Would Use Co-Ops To Monopolize Health Insurance. '[T]hese co-ops sound a lot like a health-care Fannie Mae and Freddie Mac, which Congress created because there was supposedly no secondary mortgage market. The duo proceeded to use their government subsidy to dominate the market and drive out private competitors.' (Editorial, 'Fannie Med,'The Wall Street Journal, 7/30/09)" [GOP.com, 8/17/09]

Reality: Co-Ops Would Compete With Existing Private Insurance

The Wall Street Journal EDITORIAL is all conjecture of what the co-op system could look like, not the legislative setup. 

WSJ: Details Of Co-Op Plan "Aren't Fully Known."  In an editorial on the possibility of a co-op health insurance system emerging from the Senate Finance Committee, the Wall Street Journal reported: "The details of the Senate Finance Committee's hush-hush health talks aren't fully known, but leaks suggest that one all-but-certain highlight will be new federally created health "cooperatives" to compete against private insurers. The onus is on Republican negotiators Chuck Grassley and Mike Enzi to explain why this isn't merely the House 'public option' in a better suit." [Wall Street Journal editorial, 7/30/09]

Co-Ops will provide extra competition in a market sorely lacking diversity.

Co-Ops Are Made Up Of Individuals Who Could Then Compete With Private Plans.  According to the Washington Times: "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." [Washington Times, 8/18/09]

Only A Few Insurance Companies Dominate The Market, Leaving Americans With Limited Choices In Health Care. According to the American Medical Association, 94 percent of United States health care markets are considered highly concentrated, meaning that one company or a small group of companies control a great deal of the market. [American Medical Association, "Competition in Health Insurance," 2008 Update]

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