Health Insurance Co-ops: The public option by any other name

The White House has indicated that it could accept a nonprofit health care cooperative as an alternative to a new government insurance plan, originally favored by President Obama. But the co-op idea is so ill defined that no one knows exactly what it would look like or how effectively it would compete with commercial insurers.

What is certain is that, as a substitute for a government plan, the co-op concept disappoints many liberals and stirs little enthusiasm among insurers or Republican lawmakers.

And as the White House signaled its flexibility, a contentious debate over the merits of a public plan versus co-ops began playing out in the Democratic Party. Aides to Mr. Obama tried to tamp down concern on the left by emphasizing Monday that the president still supported the idea of a public plan and had not decided whether to drop it.

Some lawmakers said the White House had sent mixed signals, confusing friend and foe alike on Capitol Hill.

Speaker Nancy Pelosi said Monday that House Democrats, rather than backing down, strongly supported giving people the choice of a new government health insurance plan. "A public option is the best option to lower costs, improve the quality of health care, ensure choice and expand coverage," said Ms. Pelosi, Democrat of California.

The first health insurance cooperatives date to the Depression where most of them were horribly mismanaged to the detriment of shareholders. They had a resurgence in the 1980's when some municipalities adopted the model with mixed results. There are a few co-ops like Group Health out of Seattle and Health Partners from Minneapolis that work fairly well by offering cheaper insurance while maintaining quality care.

But for every success story, there is failure as well. The Washington, D.C. based Group Health Association was forced to sell itself to Humana when it was done in by "falling membership rolls, strikes by staff doctors and nurses and competition from other HMOs."