Steven Hill

Relax. You’ll love healthcare cooperatives! Honest

Liberals want a public option, and see co-ops as a sellout. But if Congress passes co-ops, don't fret. They work

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Relax. You'll love healthcare cooperatives! HonestPresident Barack Obama

Watching the torturous turns of the healthcare debate in the Senate is mind-numbing, even for the most savvy policy wonks, let alone for members of the public. Each side in this debate has its own set of facts and scare statistics, and the resulting FUD — fear, uncertainty and doubt — have led to a colossal misunderstanding about healthcare cooperatives. That is unfortunate, since these co-ops may hold the key to a substantive compromise.

For liberals, and especially for single-payer advocates, their line in the sand has been drawn at the government-run public option, and so healthcare cooperatives represent another degree of sellout. Picking up a whiff of this discontent, some conservatives are supporting co-ops merely as a foil that can siphon support away from the much-demonized public option.

Yet private, nonprofit healthcare cooperatives, properly designed, actually could offer quite a lot to both the left and the right, as well as to anyone who is interested in expanding healthcare coverage, reducing costs and improving care. If the Senate combined nonprofit cooperatives with negotiated fees for each healthcare service — both components having been offered up individually in various Senate proposals but not yet combined into the same package — the making of a deal would be in sight. Indeed, nonprofit co-ops might prove to be a gift on the proverbial silver platter, because they could be just as effective as the public option and yet they will be easier to pass because Obama has some of the conservative senators thinking that it was their idea to begin with.

To understand why co-ops can work, it’s important to understand how the healthcare market works. Or rather, doesn’t work. According to the American Medical Association, insurance markets lack vigorous competition in more than nine out of 10 metropolitan areas. In 16 states, a single insurer writes more than half the policies, and nearly three-fifths of hospitals have little competitive pressure in the markets in which they operate.

That’s because dominant insurers in a local market often pay healthcare providers high reimbursement rates to discourage them from participating in rival insurance plans. That discourages other insurers from entering the market, which in turn frees the dominant insurer to raise its premiums charged to its patients to cover the inflated reimbursements. In other words, the insurance companies make out, the doctors make out — but the patients pay for it all.

The most direct way to break this logjam is to introduce a nonprofit element into the healthcare market. And here’s the beauty of it: If designed correctly, it matters little if that nonprofit element is provided by the government or by a private organization, such as a cooperative. The effect on market dynamics is substantially the same, if the nonprofit can produce quality care for less money.

To see how this potentially could work, look to Germany. Germany has more than 200 private, nonprofit healthcare companies, which cover 92 percent of its population. Germany does not use a single-payer system but instead uses a “shared responsibility” system in which individuals and employers each are required to pay a premium of 6-7 percent of the individual’s salary to the nonprofit healthcare companies. That percent is much smaller than what U.S. employers pay for their employees’ healthcare. Despite spending only about 55 percent per capita of what the United States spends on healthcare, Germany still gets much better results for the 74 million Germans who use these nonprofits.

But while having more nonprofit players is necessary, it is not sufficient. After all, Kaiser and Blue Cross/Blue Shield are nonprofits, but they rake in huge earnings and pay multimillion-dollar CEO salaries. Group Health actually is a nonprofit cooperative, and while premiums at Group Health have increased less compared to those of competitors, the increases still have been fairly significant, averaging 12.3 percent per year since 2000.

So that’s why negotiated fees for service are an additional crucial component needed to rein in costs. The impact of negotiations is best illustrated by another German practice, where representatives of the healthcare nonprofits deal with organizations of physicians, nurses, technicians and other healthcare professionals. Patient representatives also are given a seat at the table, and together they determine fees and rate ceilings for every treatment, procedure and doctor visit.

That combination — of nonprofit companies and negotiated fees for service — prevents costs from spiraling out of control. This system is better not only for individuals and families but also for businesses, since it not only makes healthcare costs for Germany’s employers lower than in the United States but also allows them to better forecast and plan for these costs.

The Senate Finance Committee is scheduled to vote on its final proposal on Tuesday. The Finance bill includes co-ops, instead of a public option, but without enough clout to set rates with doctors and hospitals; the co-ops would have to cut individual deals with each provider, instead of negotiating across-the-board terms. Several Democrats joined all the panel’s Republicans to vote down proposals to add a public option to the bill, in part because they think co-ops, not a public option, could get enough support to pass. But a bill that actually married co-ops with real negotiating clout — the bargaining power of a public option without needing to involve the government — might be an even better way to get the votes needed.

The good news for both liberals and conservatives is that nonprofit healthcare cooperatives could substantially impact market dynamics, without increasing the size of government. Both sides can have some of their cake, and eat it too. For those liberals who want a robust nonprofit element in the healthcare market, they’ll get that. For those conservatives who don’t want government playing a bigger role in healthcare, they’ll get that.

Senators, what are we waiting for? 

Keep on reforming

We've made progress in the way we elect our representatives, but we need to lose the winner-take-all system.

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Keep on reforming

Politics involves the art of achieving the possible. Rarely do you get what you want, so you take what you can get. But when it comes to electoral reform, reformers run the risk of overpromising in trying to gain attention for their particular issue — and can end up underdelivering, increasing voters’ cynicism.

Two of the most talked-about electoral reforms in the past decade have been the public financing of election campaigns and the use of independent commissions to redraw legislative district lines. While reformers have had limited success passing those two reforms — to date, only a handful of states use either public financing or independent commissions, and even fewer use both — when enacted, the reforms have been accompanied by great fanfare and hope.

Yet the impact of the two reforms has been disappointing, and it may be time to extend our efforts at reform to the primary culprit in our broken democracy: our winner-take-all elections.

Arizona, for example, has led the nation in electoral reforms, but so far has had limited results. The Grand Canyon State passed voter initiatives in 1998 and 2000 that enacted both full public financing for state elections and an independent redistricting commission. Yet recently when I gave a speech at the annual convention of the Arizona League of Women Voters, which had spearheaded the state’s reform efforts, I was surprised to hear the frustration voiced by many league members and other Arizona reformers. The post-reform electoral results have neither fulfilled their expectations nor matched the campaign hype that sold the reforms to voters.

Indeed, Arizona now has some of the least competitive races in the nation, which is not what one would expect from a state with both a redistricting commission and public financing. All eight congressional incumbents won reelection last year by landslide margins, an average of 34 percent. In the state Senate, none of the 30 seats were competitive, and more than half of the seats were uncontested by one of the two major parties. In the state House, half the races were uncontested by a major party and only five of 60 races were competitive. And 97 percent of the incumbents won reelection, whether they had publicly financed or privately financed races.

To be sure, there have been positive developments in Arizona too, such as an increase in the number of candidates running in primaries and for statewide executive offices, fostering more political debate. And 10 of 11 of state officeholders accepted public financing, including Democratic Gov. Janet Napolitano. On the other hand, the Legislature has turned increasingly right-wing, and there has been no noticeable impact on legislative policy.

So, after all their hard work, it’s not surprising that Arizona reformers expressed frustration. And Arizona is not alone in seeing disappointing results.

Iowa has been held up as the poster child for the effectiveness of redistricting commissions, yet in 2004 all congressional incumbents easily won reelection, and the average margin of victory was a landslide of 18 percent. In the state Legislature, 61 percent of seats in the House were won by landslide margins, 85 percent by noncompetitive margins of 10 points or more. Only four seats out of 100 were won by less than a five-point margin, and the average margin of victory was a whopping 47 percent.

In Washington state, whose bipartisan redistricting commission produced some of the most competitive races of the 1990s, only one of nine congressional races was close in 2004; the average margin of victory was 28 percent. In the state Legislature, huge numbers of races went uncontested. Republicans dominate almost every legislative district east of the Cascade Mountains and Democrats win almost every district in King County, the most populous, with Seattle as its seat. Other states with a redistricting commission have had similarly disappointing results.

Maine does not use an independent redistricting commission, but it does have public financing for state elections. Results have been somewhat better than in other states but are nothing to crow about.

On the positive side, the number of contested primaries rose to 39 in 2004, up from 25 in 2000, fostering more political debate. And in the November election only two races were uncontested by a major party in the state Senate, and seven in the House. But Maine remains dogged by noncompetitive elections: In 2004 the average victory margin for 35 state Senate races and 151 state House races was a landslide of 20 points. Only four races in the Senate were highly competitive (won by less than five points), while 31 in the House were, but 62 House races were won by landslide margins.

With such disappointing results in state after state, the temptation might arise to abandon these reforms as ineffective. That would be a mistake. It’s not that they aren’t good reforms; it’s just that they’re more limited in their impact than most people realize — or than reformers, caught up in their zeal, are willing to admit.

Here’s what’s going on in these and other states that makes public financing and redistricting commissions less potent: They have reached the limits of what can be accomplished within the confines of their antiquated winner-take-all electoral systems.

Under winner-take-all, a geographically based system, districts elect members of Congress and most state legislators one seat at a time; the candidate with the most votes wins, even if the tally isn’t a majority of the total votes cast — and everyone else loses. This system can deny representation to both majorities and minorities, and discourages voter turnout.

We’ve used this system for a long time (since the 18th century), but over the past 15 years something unusual has been occurring. Regional partisan demographics have been aligning in such a way that certain parts of many states have become solidly Democratic blue or Republican red. The result of this balkanization is that legislative seats that had previously been up for grabs have become one-party fiefdoms. And there’s little that either redistricting commissions or publicly financed elections can do to counter that. Demography, it turns out, is destiny.

California is a case in point. In his bid to break the back of special interests and return government to the people, Gov. Arnold Schwarzenegger announced his determination to take redistricting out of the hands of the Democratic-controlled state Legislature. His campaign has created great populist sound bites, but there’s just one problem: The plan won’t work.

In California, liberals and Democrats dominate the coastal areas and cities, while conservatives and Republicans dominate the interior areas. To draw competitive districts, one would have to start districts in downtown San Francisco and extend them in narrow bands, like the spokes of a wheel, eastward across the Bay into Contra Costa County (the conservative area). In Los Angeles, one would have to extend the districts eastward into Riverside and San Bernardino counties, with some being little more than narrow east-west bands up and down the state, a design one pundit branded the “coral snakeamander” plan.

Such districts not only would look ridiculous but also would undermine the ability of like-minded voters, especially racial minorities, to elect their representatives and would therefore end up being challenged in court. These daunting demographics will completely thwart Schwarzenegger’s attempts to shake up government.

In Arizona, liberals and Democrats are more numerous in the southern part of the state around Tucson, while conservatives and Republicans dominate the rest of the state, including Phoenix. The only way to make winner-take-all districts more competitive would be to draw narrow bands that extended vertically from south to north, like the teeth of a comb.

Partisan demographics and winner-take-all elections also result in the election of fewer moderate legislators and more extremists in places like Arizona. With so many districts locked up as Republican, a right-wing candidate who wins the Republican primary is guaranteed to win the general election. And in a primary with multiple candidates, the right-winger can win with a low percentage of the vote by mobilizing a core of rabid supporters.

In short, California, Arizona and many other states find themselves in a new paradigm in which the problem is not simply who draws the legislative lines, or whether one candidate greatly outspends the other, but partisan balkanization, in which legislators are elected via a checkerboard electoral map of individual districts. These states’ winner-take-all electoral system has reached its endgame.

The way forward is to get rid of the winner-take-all system and adopt the electoral method used in places such as Peoria, Ill.; Amarillo, Texas; Cambridge, Mass.; and dozens of other local jurisdictions. This method employs multiseat districts in a way that greatly increases competition and makes public financing of candidates much more effective.

For example, instead of electing 30 state senators from 30 individual districts, Arizona voters in six larger “super-districts” could elect five senators each. With a Peoria-type electoral method, any candidate who won at least a sixth of the vote would earn one of the district’s five seats. These five-seat districts likely would be bipartisan, electing some Republicans in liberal areas and some Democrats in conservative areas, greatly decreasing balkanization. Moderates, independents and occasionally even a third-party candidate would win a fair share of seats. Since all regions of the state would be competitive, voters would have more choice across the political spectrum, regardless of where they live. Not surprisingly, other nations that employ this kind of “proportional representation” system consistently enjoy voter turnout levels twice that of U.S. congressional elections.

Reformers across the country should recognize that publicly financed elections and independent redistricting commissions are valuable but insufficient reforms. If we want to revive American democracy, it is necessary to get rid of our antiquated winner-take-all electoral system.

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Winner take some

A new kind of electoral affirmative action could mean more power for minorities

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despite Bob Dole’s vow to fight for California’s 54 electoral votes, the most significant vote in the Golden State on Nov. 5 may not be for president. Instead, it could be for a little-known charter amendment in San Francisco, one that supporters say could mark the death knell of winner-take-all elections in cities across the country.

If passed, Proposition H would install a system of preference voting giving minority voters in San Francisco a real chance to win representation. The campaign is being watched carefully in other urban areas which are looking for ways to enfranchise increasingly fragmented minority groups within their multi-minority populations.

The term used to describe the new system — proportional representation — has gained currency since law professor
Lani Guinier urged its adoption as a way of politically empowering blacks and other minorities. Her stand cost her the nomination as civil rights head of the Justice Department, but the proposal continues to win converts, both nationally and locally.

Today, in addition to the San Francisco initiative, there are two bills in
Congress on proportional representation — one sponsored by Rep. Pat
Williams (D-Mont.) and another by Rep. Cynthia McKinney (D-Ga.).
Many small communities have adopted proportional systems for elections to school boards and other local bodies. Chicago has spent more than $6 million to defend its one-seat wards against competing voting rights suits from Latinos and African Americans. Similar inter-minority battles have been waged in Detroit, Los Angeles and New York.

San Francisco’s Proposition H is the most high-profile campaign on the issue yet. Modeled after a system in Cambridge, Mass., it would replace the current winner-take-all, at-large voting system for the city’s Supervisors with one where
voters would list their choices in order of preference — according to how many seats are up for election. If there are five seats, a winning candidate would need one-fifth of the total vote, plus one. Votes they receive over that would be redistributed to other candidates, according to their voters’ ranking of the other candidates. Under San Francisco’s current system, candidates rarely win with less than 40 percent of the citywide vote. Supporters say that this system will ensure greater representation for minorities and other self-defined groups of like-minded voters in proportion to their voting strength.

San Francisco has flip-flopped between the current at-large system and old-style
ward elections (called “districts” in the city) since the 1970s. A
citizens task force appointed in 1994 was widely expected to endorse
district elections, but the group discovered that given the city’s extraordinary
diversity — including over 35 strongly-defined neighborhoods, four major
racial groups, a plethora of ethnic sub-groups, gays and lesbians,
conservatives, progressives, liberals, moderates and everything in
between — it was almost impossible to draw “fair” district lines.

After a year-long community education process, the Board of Supervisors
voted to put two choices before the voters: district elections (Proposition
G) and preference voting (Proposition H). The current Board of Supervisors overwhelmingly endorsed Proposition H, as have numerous urban
groups.

A win for Proposition H is far from assured, but
supporters are cautiously optimistic. If preference voting is successfully
implemented in a city with more voters than 7 states, San Francisco
could become the model for urban reformers grappling with how to give
diverse communities access to the making of public policy.



Rob Richie is executive director of The Center for Voting and Democracy in Washington,
D.C. Steven Hill is the Center’s West Coast director based in San
Francisco.
) Pacific News Service


Quote of the day

Sauce for the goose

“With a sardonic ruthlessness reminiscent of Joseph McCarthy, Dole hurled a continuous barrage of unsubstantiated charges at us. I was doubly shocked that he would so openly intrude in a federal prosecution and would permit himself to be used by Caspar Weinberger’s attorneys. This type of influence-peddling is generally left to party fixers.”

– Lawrence Walsh, the government-appointed independent prosecutor who investigated the Iran-Contra case and brought an indictment against former Defense Secretary Caspar Weinberger (pardoned before the trial by Ronald Reagan) in the chapter entitled “Bob Dole, Pardon Advocate,” from his forthcoming book “Firewall: The Iran-Contra Conspiracy and Cover-up.”

(From “On the Question Of Presidential Pardons, Dole Has Taken Both Sides” in
Wednesday’s
New York Times
)

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