STEVE INSKEEP, host:
And now let's turn to another matter where President Obama has lobbied hard. It's health care and the public option, the idea of introducing a government-run insurance plan. The public option was voted down in the Senate Finance Committee this week. That same committee is now offering an alternative called Health Care Insurance Cooperatives.
Democratic Senator Kent Conrad of North Dakota is the chief supporter of the coops.
Senator KENT CONRAD (Democrat-North Dakota, Senate Finance Committee): They're not government run, government controlled. They're membership run and membership controlled.
INSKEEP: Chana Jaffe-Walt, with our Planet Money Team, has been trying to understand how this would work. For help, she called up health reporter Keith Seinfeld of member station KPLU.
CHANA JOFFE-WALT: So, Keith, you were actually one of a tiny percentage of people already covered by a health care cooperative.
KEITH SEINFELD: That's right, Group Health Cooperative here in Seattle.
JOFFE-WALT: And tell them what you told me about the choking.
SEINFELD: You mean when I first heard about this plan?
JOFFE-WALT: Yeah, when you were sitting at your computer�
SEINFELD: Right, I'm sitting at my computer back in June, and I get this email. It's some health reporter's listserve. It says something about how health care cooperatives are going to be the hot new solution in health reform. They create competition, lower costs, and I think I actually did choke on my lunch.
JOFFE-WALT: You were surprised?
SEINFELD: I had to reread it two or three times, �cause it seemed like the idea of health co-ops just came out of nowhere.
JOFFE-WALT: Right. Okay, so what are they?
SEINFELD: It's an insurance company.
JOFFE-WALT: Yeah, but it's different, right, it's a nonprofit?
SEINFELD: Yeah, but we already have a bunch of nonprofit insurance companies, like the Blue Cross Blue Shields. That's what's been confusing to me.
JOFFE-WALT: But what makes a health care cooperative different?
SEINFELD: The only real difference is you get to vote. All the people with insurance, they can vote in this annual election for the board of directors.
JOFFE-WALT: Oh, so you vote every year?
SEINFELD: No, I don't vote.
JOFFE-WALT: You don't vote?
SEINFELD: Almost no one actually votes. Less than one percent of group health members vote. You have to sign up to get a ballot. There's a form to fill out. There is one other big cooperative in Minnesota and they get as much as a third to vote, so I guess that's better. Honestly, everyone here was pretty surprised they were even talking about this model. I figured at least my insurance company, Group Health Cooperative, would be feeling good about being in the spotlight. But Chana, here's Pam MacEwan, the VP of public affairs, and she's confused.
Ms. PAM MACEWAN (Vice President of Public Affairs, Group Health): We were surprised and we were surprised that the discussion of cooperatives has gone on as long as it has. There's not a magic bullet and cooperatives are not a magic bullet either.
JOFFE-WALT: That's from a woman who helps run a health care cooperative. Okay, but keep - I mean co-ops are in this bill in the Senate Finance Committee. It calls for expanding health care cooperatives into all 50 states, and there is Senator Conrad trying to sell it. And he is making the argument that in many parts of the country there aren't very many options when it comes to insurance companies. So by adding cooperatives, it's a nonprofit alternative to for-profit insurance.
SEINFELD: The thing is, there's hardly anyone anywhere who's actually studied whether adding co-ops would make any difference, or studied co-ops at all.
JOFFE-WALT: Yes, I am noticing there are precious few - Timothy Jost is one. He's with Washington and Lee University in the law school.
So are you like the co-ops guy? You're the guy that everybody calls?
Mr. TIMOTHY JOST (Washington and Lee University Law School): Yeah, I think so, which I think tells you something about how much anybody knows about them. I mean there's not a literature out there on health care cooperatives. They don't exist.
SEINFELD: Jost has tried a thought experiment to imagine what it would take to set up cooperatives across 50 states. Trust me, it's a long and detailed process. The bottom line is there's a huge number of hurdles, which he says would likely kill them off before they ever got going.
JOFFE-WALT: Right. And he says if cooperatives are an alternative to a public option in that the idea is that they'll lower the cost of insurance, well then he's confused.
Mr. JOST: Where I've seen cooperatives in operation, they don't really compete on price. They compete on quality. They compete on customer satisfaction. And that's good. We need more quality. We need insurance products that people are really happy with. But what we need most is cost control.
SEINFELD: Actually, that is an important point. My co-op does get fewer complaints than other insurance companies. The affordability problem, it's unclear how they solve that.
JOFFE-WALT: It seems like the main problem co-ops really solve is a political one. People against the public option may vote for something that's not run by the government and people for the public option may say, okay, this is the next best thing.
SEINFELD: I'm Keith Seinfeld.
JOFFE-WALT: And I'm Chana Joffe-Walt, NPR News.
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