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Please begin with an informative title:

Note: I'm the author of the new book, President Barack Obama: A More Perfect Union, but I have no connection to the Obama Administration.

I never thought I'd see the day when progressives would be trashing cooperatives as a right-wing conspiracy. But that's one of the oddities of the current health care debate.

I'm a big fan of cooperatives. I've been a member of several co-ops, from credit unions to bookstores to grocery stores, and even worked at the Hyde Park Co-op back when a guy named Barack Obama was one of our member-owners. And I think progressives have been given an incredible political gift in having a health insurance cooperative offered to us instead of a flawed public plan.

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Why would a government-started health insurance cooperative work? For the same reason that lots of other big cooperatives work. Cooperatives are a good mechanism in a free market for competing against for-profit institutions. That's why so many small businesses use them. But consumer cooperatives typically lack the capital and market share to compete effectively: however, a government-sponsored cooperative with adequate start-up funds could change things dramatically.

Some on the left definitely do not agree. Jane Hamsher of Firedoglake calls the co-op idea a “faux 'public plan'” and claims, “There could only be one purpose served by such a plan: pull a bait-and-switch on a public plan.” Howard Dean declared, “I do think there will be primaries as the result of all this, if the bill doesn't pass with a public option.”

But Obama is right: there's a lot more to health care reform than just the public plan, and if the co-op can offer a viable alternative (and perhaps a better alternative), then we shouldn't shun it. It's true that no one knows exactly how a cooperative will work, or if it will be effective in competing against private insurance companies. But that's equally true of a public plan. We're all entering new territory here.

The first argument against a public plan is that it can't pass. According to Sen. Kent Conrad (D-ND), “there are not the votes in the United States Senate for the public option. There never have been. So to continue to chase that rabbit I think, uh, is just a wasted effort.” The idea that we would be better off with no health care reform rather than a co-op is just plain crazy. If health care reform is defeated in 2009, the result will not be a public uprising in 2010 by the proletariat demanding a revolution. The result will be confirmation of the status quo belief in Washington that health care reform is impossible, the same thing that happened in 1993.

The second argument against a public plan is that it will be severely constrained in what it can do. Perhaps the progressive supporters of the public plan, who so far have been out-organized by a bunch of right-wing crackpots wielding Hitler posters, can finally press the Blue Dog Democrats to adopt a public plan. But even if a public plan managed to pass, at this point it seems likely that it would be hamstrung and compromised, limited in how aggressively it can push for lower prices and better quality. Even under a genuine progressive such as Barack Obama, a public plan is deeply compromised by the influence of corporate America. The pharmaceutical industry has agreed to no more than $8 billion a year in savings for the elderly, indicating the limits that a public plan would face. Although Obama has been pushing for a progressive approach and a public plan, he is limited by what conservative Democrats will accept.

The third argument against a public plan is the danger of what happens in the next Republican administration. Consider this hypothetical: What happens if a George W. Bush Republican becomes president at some point in the future? What happens if a President Sarah Palin in 2017 appoints the people in charge of the public plan? What happens if a “Heckuva Job” Brownie is running this public plan, with Karl Rove whispering in his ear, determined to prove that small government is best by mismanaging government agencies? Can you imagine what the public plan would be like with a Dick Cheney type of the insurance industry running it? If you think this is impossible, you obviously didn't learn anything during the years 2000-2008.

A cooperative, by contrast, is much better insulated from right-wing politics. Its board should be elected by the members of the health insurance cooperative. And we know that right now, the uninsured likely to buy into the cooperative tend to be the young and the working poor—two key demographic groups supporting Obama and progressive politics. We're better off trusting these people rather than the current corrupt political system that would run a public plan.

A co-op could be the best mechanism, better than a public plan, to provide a better, cheaper alternative to private insurance. It could also begin operating much earlier than the public plan, which is not scheduled to start until 2013 under the existing legislation. A co-op could easily start operating in 2011 and begin providing immediate competition to private companies. Imagine having millions of Americans voting online to select members of the Board for a health insurance cooperative, and the massive public attention given to health insurance issues.

The right-wing is scared of co-ops. Rush Limbaugh declared:

And these co-ops like we're too stupid to know what that's all about. Co-op? Why don't they just call them communes? Look, I know liberal lingo when I hear it. A co-op? Yeah, let's go to the farmers market. Let's go to the community garden! What, do they think we're idiots?....Co-ops. As long as they're going to create some government entity and as long as they're going to make private insurance unsustainable with limits and regulations and taxation, their objective is the same. Co-ops! Man, you people at the administration, if you're going to try to fool us by thinking you're dumping the public option well then come up with some name that doesn't reek of liberalism.
And he's absolutely right. The idea of a co-op reeks of liberalism. It's democratic, not-for-private-profit, and open.

Ben Shapiro noted on Townhall.com, “the 'co-op' myth will provide Obama the cover he seeks to utterly swamp the private system. When private insurer care drops in quality -- a drop necessitated by new regulations -- Obama will declare their care insufficient. More and more Americans will opt for the new 'co-ops.'” As Sen. Orrin Hatch (R-UT) observed, “You can call it a co-op, which is another way of saying a government plan.”

The fact that the right-wing hates an idea is not necessarily proof of its progressive character. But it is a good indication that cooperatives aren't a Trojan horse designed to destroy health care reform. They're a powerful instrument for improving our system, and that's what the conservatives fear.

I appreciate the fact that progressives are finally speaking out and refusing to silence their demands for progressive policies. I just wish they had chosen a genuinely progressive position for the Left's Last Stand.

At least 60 House Democrats, enough to block passage of reform, have signed a letter declaring that “Any bill that does not provide, at a minimum, for a public option with reimbursement rates based on Medicare rates--not negotiated rates--is unacceptable.” But it's doubtful that a public plan can get 60 votes in the Senate, and highly unlikely that it would require Medicare rates for everyone if it does manage to pass.

What's important is not to kill the health insurance cooperative and vainly try to save a flawed public plan, but to demand that the co-op proposal will be a good, progressive one.

First of all, it should aim to be a single national insurance co-op, rather than a bunch of small co-ops. Small co-ops don't have a great record of success. My Hyde Park Co-op went defunct after an ill-fated attempt to expand beyond a single store. But it was always precarious in a world where the big corporate chains have more buying power. A 2000 General Accounting Office report on health insurance cooperatives that noted, “None of the purchasing cooperatives we reviewed had a large enough market share to create bargaining leverage and therefore had a limited ability to significantly increase the percentage of small employers offering coverage in their state.”

But the problems of small state-based cooperatives would not apply to a national cooperative. According to the Reuters, "Conrad said $6 billion would be needed -- in loans and grants to help doctors, hospitals, businesses and other groups form nonprofit cooperative networks." While various cooperative networks for doctors and hospitals should be encouraged in this legislation, the goal for insurance should be to have one cooperative capable of the size necessary to negotiate good prices in the open market. If we allow the reform plan to be split into a thousand different insurance co-ops, the result will be an improvement over the existing system, but a missed opportunity to make substantial change.

Second, the national co-op needs substantial initial funding to start, to help it build its structure and recruit members.

Third, the national co-op needs to be freed from government regulations designed to aid the insurance industry by limiting competition. This includes stopping corrupt state governments from preventing a national co-op through regulation. The co-op should be free to determine its own policies, not be micromanaged by politicians. It should start as soon as possible, rather than being limited to when the rest of the health care legislation goes into effect.

If a cooperative works well, it could be the first step in transforming America in a more progressive direction. People who buy their health insurance from a cooperative will be much more amenable to buying their groceries and books and much more from other cooperatives. We would no longer have to depend on an easily-corrupted government to compete with private industry.

Progressives have been given a tremendous opportunity here. The right-wing and the insurance industry has concentrated all of their opposition to health care reform against the idea of a government-run insurance plan. Utilizing a co-op undermines all of their efforts while achieving virtually the same (and perhaps even better) results as a public plan. The Blue Dog Democrats have only criticized a public plan, while largely embracing the idea of a co-op. This means that the exact details of a co-op plan can be moved in a progressive direction without compromising any votes. It will be almost impossible for any Blue Dog (and even some moderate Republicans) to vote against a solid, progressive co-op plan for health care reform. But right now, all of the political energy of progressives is aimed at stopping a co-op rather than making the only reform likely to pass into an excellent plan.

Drawing a line in the sand against a cooperative is the worst possible stand a progressive can make.

Crossposted at ObamaPolitics.
Watch me debate Paul Street on this and other issues, "Is Barack Obama a Progressive President?" Thursday, August 27, 6:45pm, Chicago Public Library Lincoln Park branch.

Extended (Optional)

Originally posted to JohnKWilson on Thu Aug 20, 2009 at 08:51 AM PDT.

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