Reviewing the Bidding on Health Care “Reform”


Carl Graham

As ideas turn into proposals with Senator Max Baucus’s “Chairman’s Mark,” now is a good time to review the bidding on how well current congressional health care reform plans address their stated goals of increasing access and decreasing costs.  We’ve all been inundated with data lately, so let’s just step back and take a common sense look at the main proposals:

Single-payer system: Turns out most Americans don’t want nationalized health care with the government deciding who gets treated, for what, and at what price; at least not now.  So to kick the can down the road we have…

The Public Option: Government becomes an insurance company to “keep it fair,” but nobody could really explain how they would provide cheaper insurance without killing the private sector.  And what’s the point if the government insurance isn’t cheaper?  So we next had…

Co-ops:  Except that there already are co-ops and there’s nothing stopping more from being created tomorrow.  But wait, this one is better because it will start with billions of taxpayer dollars, receive billions more in taxpayer subsidies, and be run by government appointees.  Or was that the Public Option?  Whoa, just what’s the difference between these two?  Turns out pretty much nothing, which leads us to…

Exchanges: Gee, if only there were some magical technology that would link people with insurers and allow them to compare rates, evaluate terms, and buy policies with just the click of a few buttons.  We could call it the “internet.”  But insurance is very complicated and people make mistakes. So let’s protect them by having government decide which insurance companies can be included and by dictating what they must cover, what they can charge, and what products (like health savings accounts, for example) they can make available.   But wait, if companies have to offer pretty much the same thing at the same price, isn’t that like the Public Option or Co-op, which means there’s not much difference between that and government-run plans?  Hmm, how about if we try…

Mandates: If only everybody had to buy insurance then we’d all share the costs, from each according to his ability and to each according to his needs.  Big insurance and health industry companies love mandates because they effectively lock out competition and lock in profits, which explains why Senator Baucus has received nearly $3 million in campaign contributions from them, according to  But do mandates hold down prices? Massachusetts reached a 97% coverage rate through mandates of various types and has subsequently seen their health care costs rise as much as 42% faster than the national average.1 They’re expected to rise another 10% in 2010, compared to 5%-7% nationally.2 Hmm, so much for mandates controlling costs.

And mandates kill jobs.  If employers are forced to either insure or pay a fine on their low wage employees, how much incentive do they have to retain those employees or hire more?  Low wage earners are the people most easily replaced through outsourcing and mechanization, and the ones who will be most hurt by mandates.

And finally, since the government decides what coverage satisfies the mandate, they effectively control the market, as we saw with exchanges.  Say goodbye to your Health Savings Account, limited coverage, or any other option that lets you control your premium and deductible.  Say hello to paying for mandatory coverage on every ailment, drug, treatment, provider, and everything else with a good Washington lobby and a congressman’s ear.

All of these options kill jobs, explode the deficit, and inevitably lead to a government-run system as private players are squeezed out of the marketplace.  And government programs typically don’t reduce costs or improve services, especially once they achieve a monopoly.

Rather than overhaul one-sixth of the economy with a risky and inevitably wasteful government takeover, let’s do some simple things that promise measurable results and broad bipartisan support.  We can increase competition by allowing people to buy insurance across state lines.  We can reform tort laws to reduce wasteful defensive medicine.  We can provide tax credits and vouchers to individuals rather than companies to provide a safety net and give them a personal stake in controlling costs.  We can reward healthy lifestyles.  These are just a few ideas that address the real problems of cost and access without making a naked power grab.  Why not give some of them a try before committing ourselves and our children to massive debt and complete government control over our health and well being?


1 Cathy Schoen, Jennifer L. Nicholson, and Sheila D. Rustgi, “Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes,” The Commonwealth Fund, August 2009, p. 8, Data%20Brief/2009/Aug/1313_Schoen_paying_the_price_db_v3_resorted_tables.pdf,  in Cannon, Michael F, “All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover,” CATO Institute, September 23, 2009.

2 Robert Weisman, “Health Costs to Rise Again,” Boston Globe, September 16, 2009,



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Contact MPI President Carl Graham at 406.219.0508, or email

The Montana Policy is an, independent, nonprofit, nonpartisan policy research center based in Bozeman.  It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.

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A Co-op By Any Other Name


Carl Graham


As the conversation about health care reform turns to co-ops, it might be useful to take a step back and readdress how we got here. The “Public Option” put forward by Congressional Democrats tacitly accepted that most Americans do not support a single-payer, government-run health care system. This point has also been consistently upheld by polling data, even as the same polling data affirm that most Americans believe our health care system is broken and in need of reform.

But now the public option is ailing, too. And we’re asked to embrace its fraternal twin: the co-op. The problem isn’t really the co-op idea – although the idea certainly has problems. The problem is that many of us see both the public option and co-ops as an end-around to what Americans have repeatedly and adamantly said is unacceptable: single-payer government-run health care.

Our health care system needs reform. We need to improve access to quality care for the uninsured and for those with preexisting conditions. And we need to get medical costs under control before they drive us into national bankruptcy. No serious person that I know of is arguing otherwise. But many of those involved in the debate have been less than candid in relating their desired ends to their proposed means, leaving those of us who favor free market solutions to look for wolves in sheep’s clothing in any proposal they put forward.

The co-op idea is innocuous enough. In fact, health insurance co-ops already exist throughout the country. And there is nothing currently stopping state or local governments from starting more of them tomorrow. Minneapolis has one with 660,000 members and the Group Health Cooperative in Seattle provides coverage for 10 percent of Washington State residents. So if they already exist how will adding one more co-op to the mix, not to mention the 1,300 or so private insurers already out there, increase competition? It clearly won’t. So why a national co-op, and why now?

With much of the Democratic leadership on record as favoring a single-payer system it just doesn’t pass the giggle test to assert that this isn’t yet another stone on the path towards a single-payer system. Senator Reid’s statement that “We’re going to have some type of public option, call it a ‘co-op’, call it what you want…” seems to indicate that co-ops are simply a rebranding of the public option that most Americans clearly don’t want. So let’s ask them to demonstrate that their real intent is to create a true co-op – even though they already exist – and not simply a “rose by any other name” public option.

It’s a simple test. If it walks like a duck and quacks like a duck, it’s probably a duck. A true co-op is owned and controlled by its members. They provide the investment, they pay the costs and receive the benefits, and they elect a board to oversee management, make rules, and provide governance. That waddles and quacks just fine.

Although it’s a moving target, the ‘co-op’ being considered by Congress wouldn’t look quite like this. Sen. Charles Schumer (D-NY) for example, makes it clear that the co-op’s officers and directors would be appointed by the president and Congress, and that Congress would set the rules under which it operates. Or it might be done by the Secretary of Health and Human Services. It would also receive a taxpayer-funded multi-billion dollar startup investment and subsidies for some undetermined time. Proponents say these would all be temporary, sort of like the post office, AMTRAK, Fannie-Mae and Freddie-Mac, and a whole bunch of other ‘temporary’ government-sponsored entities that are now doing just fine on their own. I’ll leave it for others to explain how this fits the definition of co-op and just point out that it looks pretty much identical to the public option that’s being jettisoned in the face of fierce grass roots opposition.

There are health system reform ideas out there that can pass with bipartisan majorities tomorrow if simply increasing access and decreasing costs are the real objectives. We can provide vouchers and tax credits that empower consumers to shop for the best policies rather than being tied to employer or government-based plans. We can reward healthy lifestyles, reform tort laws, reduce Medicare and Medicaid waste, and implement a host of other options that cost little and empower people rather than bureaucrats and politicians. Why not give those a try before turning a sixth of our economy and more of our freedoms over to the whims of special interests and their government enablers?



To schedule an interview with MPI President Carl Graham, please call 406.219.0508 or email

The Montana Policy is an independent nonpartisan policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsibility, and market oriented policy solutions in Montana.


Montana Policy Institute

67 W Kagy Blvd, Ste. B

Bozeman, MT 59715