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What exactly is a health care co-op?

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Kai Ryssdal: President Obama heads to Capitol Hill tomorrow night looking to bring some elusive consensus to the health-care debate. The health-care news of this Tuesday, however, comes from the Senate Finance Committee. It’s mulling the idea of something called regional insurance co-operatives. Yes, that’s a mouthful. But it’s also a phrase you may hear a lot this fall, as Joel Rose reports.

JOEL ROSE: So what exactly is a regional insurance co-op? That can be hard to say, even for North Dakota Senator Kent Conrad, who’s been pushing the idea all summer on cable TV.

SENATOR KENT Conrad: A cooperative is membership-owned and membership-run, so it’s a non-profit alternative to for-profit insurance companies.

In other words, it’s a non-profit company that would sell health insurance to some of the 47 million Americans who don’t have any. If you’ve ever bought a policy through a mutual life insurance company, it’s the same idea. But it would only be insurance.

It’s not the same thing as a health co-op, where doctors work on salary. Paul Hazen is CEO of the National Cooperative Business Association. In theory, he says insurance co-ops run by their members could offer cheaper coverage than for-profit companies.

PAUL Hazen: They’re not-for-profit businesses. They don’t have outside stockholders to reward, and they provide a competitive yardstick in the marketplace.

You could say the same thing about the so-called public option. And like that plan, which many conservatives oppose, co-ops, too, would rely on public dollars, at least at first. The idea has its critics, including Paul Ginsburg at the Center for Studying Health System Change. He thinks co-ops might be too small to offer much of a discount.

PAUL Ginsburg: I’m not convinced that they would run their businesses that much differently. Because if they did, they’d be losing money.

Still, if co-ops can help an overhaul bill squeeze through Congress, Ginsburg says that in itself could be a big step forward.

I’m Joel Rose for Marketplace.

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