The Public Option (or) Banks vs. Credit Unions

I’ve been thinking a bit about the defeat of “the public option” for health care in the Senate Finance committee bill, and it may not be as bad as folks fear. We need to remember our goal is not to have a public option — the public option is simply a mechanism to increase competition to bring down health care costs. If we remember that the goal is lower health care costs and not simply government involvement, there may be a way through this.

Let me explain. I’ve always thought of the battle for a public option to go against the soulless greedy private insurers 🙂 as akin to credit unions vs. banks. Credit unions affect the market by being shareholder owned non-profits, and the competition forces banks to either provide unique services or lowers the costs. In return, credit unions have limitations, such as not typically providing business accounts, or having limited fields of membership.

Suppose we were to focus on this non-profit model, which I believe is permitted under the Baucus proposal. Think of “health unions”, which are owned by the insured members, not shareholder. The incentive would be to lower costs for their members, not make profits and deny coverage. They might be given some tax advantages (I believe credit unions have some tax advantages) as an incentive for their existance, but might also be limited, like credit unions, to serving limited groups (perhaps geographic, perhaps employer based or school based — some common interest or thread). But such a model could still work on encouraging lower costs for health services without having the level of government involvement that folks fear about the “public option”.

If I recall correction, there have been efforts like this in other insurance areas: weren’t the “mutuals” actually owned by their policy holders, not explicitly for profit (think things like Mutual of Omaha). As I recall, when they went for-profit, they had to return some money to the policyholders/owners.

Would this work? Am I off base? It might be a way to a middle ground that will achieve the most important goal — improving the health care situation in this country. That’s what we should be working towards, not what this party or that party wants as the specifics.