New Word in Healthcare Debate? Co-Op

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WASHINGTON -- Support for a government run "public option" in the healthcare plan is falling. So the new word in the debate is "co-operatives" or co-op for short.  But few people understand what co-ops are - or how they would work.

What's a Co-Op?

As if the healthcare debate could get any more confusing, now get ready to figure out what a healthcare co-op is all about. With the government run option losing steam nationally, co-ops are the new talk inside the beltway. But what are they and how would they be different from a government run option?

"The real key difference is that it is a private business owned and controlled by those people who use it versus the public plan which is a government owned planned which would be managed by the government and funded by the government. And so there's a real clear difference between the two proposals," explained the National Co-Op of Business Association's Paul Hazen.

A cooperative is basically a non-profit business owned by the people who use it rather than outside shareholders. It's kind of like a credit union.

Consumers elect a board of directors and they are usually set up by state or region. If they are big enough, they usually have low administration and overhead fees so theoretically that could mean lower premiums.

Most experts agree that an effective co-op needs tens of thousands of members. The problem is that could take years to build up and the start up costs are huge.

"When they are large enough in order to have economic clout in the market place they could really drive down the costs of products and services," said Hazen. "And because they're doing that on a not-for-profit basis and not rewarding outside investors, they are able to pass those profits back to the members are provide better service at a lower cost." 

A Co-Op by Any Other Name…

But while it sounds good on paper, the reality may be much different. The federal government could have their bureaucratic hands all over it.

First off, a co-op would require billions of federal dollars which means Congress very well could have some oversight responsibility. There is also some initial talk in Congress of having a federal governing board to oversee it - at least at first.

It's led critics to calling it another public option just repackaged.  The number two Republican in the Senate, Jon Kyl says "it's the same thing by another name. It is a Trojan horse."

Even the Democratic leader in the Senate Harry Reid said last month "we're going to have some type of public option, call it 'co-op', call it what you want."

So what is this cooperatives all about? The White House doesn't really want to speculate because they say the government run option is still on the table."

White House healthcare spokesman Linda Douglass told CBN News that talking co-ops is getting ahead of the game.

"There's really no way to evaluate that at this moment," said Douglass. "It is certainly being talked about how it could achieve those goals. Certainly it's worth a look at but there aren't any details to look at now.

Part of the problem may be that eventually on these co-ops there may be way too many details for people to understand. No one is quite sure what form a healthcare co-op will take.

Confusion is not a friend to the White House and by the way, neither is the GOP. The White House is now signaling they may just stop looking for Republican support on any final healthcare bill and focus in on trying to convince skeptical moderates in their own party.

It's just another day in the life of this ongoing healthcare debate which the White House hopes doesn't turn into a healthcare debacle.

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David Brody

David Brody

CBN News Chief Political Correspondent

David Brody is an Emmy Award-winning veteran news journalist who has interviewed many prominent national figures during his career of nearly 25 years. Currently, David covers the White House and interviews national newsmakers across the country.  Follow David on Twitter @TheBrodyFile and "like" him at