co-ops, socialized medicine, and deregulation

Ezra Klein has an interview up with Senator Kent Conrad of North Dakota. In it they discuss the Senator’s health care reform proposal to implement federally chartered, non-profit cooperatives to compete against private insurers.  Now, when it comes to most-things-co-operative – small farmers, brewers, natural health food stores, bookstores etc. – I am typically a big fan.  And I think, along with others who have been writing about this the past couple days, that there is room for a co-operative option in the general mix of health care reform.  For a certain class of people in this country, such a plan might be really great, and it’s even possible that such a plan could help make the overall system more competitive.

However, I don’t think that Conrad’s co-ops would address the bottom tier of society, or young lower-middle-class families and especially those entering the work force.  And because those elements of society would not be adequately covered, the health care discussion would not be resolved.  This would further complicate matters and make a real, meaningful reform effort virtually impossible.

I think a multi-tiered or multi-faceted approach to health care is the only way forward.  Co-ops should be a part of this.  They represent a real possibility to increase health insurance coverage for small businesses, the self-employed, and possibly even some lower class citizens if they turn out to be truly competitive.  But I think we need a single payer, and probably even socialized option available as well.  In fact, the more I’ve thought about this, the more I see a public plan opening a doorway to competition that doesn’t exist in the current system.

A lot of the regulatory problems with the health care market now exist because of the complex nature of employer-provided coverage and because of the drive to provide as many people as possible with private insurance.  It’s the public/private partnership that so often muddies the waters.  A better idea would be to free up insurance regulations in the private industry and allow them to compete without the sort of stifling government regulations that exist today, and to do that we need a public, universal plan, too.

Conservatives generally claim that a truly competitive insurance market would provide cheaper and better consumer-based health insurance solutions.  They also claim that public insurance would be terrible, and even if free, people would rather be able to purchase their own.  So let’s do both and let the market decide.  Let’s completely abolish the current status quo.   On the one hand, let’s provide a completely free public option – or at least a public option with graduated costs based on income.  At the same time, let’s get rid of the employer tax subsidies tied to insurance now and deregulate the industry as a whole.  This would, theoretically, give both sides of the issue what they want.  It would also create a more even keeled competitive market than an employer-provided insurance industry – heavily subsidized by the government – could hope to achieve.  (I would also suggest patent reform and open-source options to drive down costs, but that’s a post for another day.)

And at the same time as all of this, let’s go ahead and charter some big non-profit co-operatives as a sort of “third way.”

The public plan should include preventative care options at the most basic levels, and should model its primary care off of the British system which requires patients to see “gate-keepers” – general practitioners usually – before they can go to specialists.  This is where the “socialized” part should come in, as the government could set up these primary care clinics relatively cheaply and use them as a stop-gate to more expensive and often unnecessary services.

At the upper tiers of society, theoretically the deregulation of the private insurers and the divorce of health insurance from the employer would have numerous positive effects.  First, along with the public plan, it would create the first real chance for actual wage increases across the board as employers would be able to (and pretty much obligated to) provide higher salaries instead of comprehensive benefits packages (though that could certainly be an option still).  Second, it would drive down costs on premiums allowing individuals to purchase their own insurance for less, and thus making private insurance more competitive against the state-backed plan.

You could look at this as a compromise but I see it as more of a mutually beneficial scenario, though certainly such a plan has the potential to gain some Republican support in Congress.  The public option provides the necessary safety net and base-line competition to allow the private deregulation to take place (without the inherent risk normally involved in such a process).  The co-ops add another layer of competition and choice to the mix.  Slap a mandate on top of the whole thing and everyone is covered.  Ax Medicare and Medicaid and shift their funds to the new program.  Voila!

Then, find a way to pay for it.