Liberty Maven

It was all over the news and Sunday talk shows yesterday. The Democrats and Obama are capitulating on having the federal government compete with private insurers. It looks like the so called “public option” will be replaced with non-profit health insurance cooperatives.

WASHINGTON – Bowing to Republican pressure and an uneasy public, President Barack Obama’s administration signaled Sunday it is ready to abandon the idea of giving Americans the option of government-run insurance as part of a new health care system.

Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession probably would enrage Obama’s liberal supporters but could deliver a much-needed victory on a top domestic priority opposed by GOP lawmakers.

Does this really mean the the public option is dead? Hardly. I laughed aloud when I read the following line later in the same article:

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government.

We know from history that this is a contradiction. This is loosely the equivalent of setting up a health insurance version of Fannie Mae and Freddie Mac, not the best examples of fiscal responsibility.

It’s a good thing these health insurance cooperatives will be non-profit because they won’t be profitable. This new effort at compromise is just a different albeit slower path to the public option.

Once the money starts to run dry for the cooperatives there is little doubt government bailouts and subsidies will follow. Ask former GM CEO Rick Wagoner what happens when the the government starts handing you the people’s money. The borrower is slave to the lender. Hello public option.

It’s my guess this is exactly how the Obama administration will sell it to the now angry liberal insiders who have been fighting for a public option all along. “It’s not going away, it’s just gonna take us a bit longer to get there,” Obama will say.

Sure the GOP and the pissed-off public can claim a battle victory by forcing Obama’s hand. But the war is not won. Non-profit cooperatives in health care will just give the public option crusaders easier targets for nationalization in the future. This is progressive incrementalism at its finest (or worst).

It’s a small conciliatory step when what we need is a gigantic free market leap. They are trying to neutralize the public outcry. Please don’t fall for it.