The new flavor of the week in the nation's health care debate is the non-profit cooperative, a collaboration of health care providers that the White House says it will consider as an alternative to the public health care program that is being strongly opposed by many members of Congress.
But health policy analysts say cooperatives raise more questions than answers, and the proposal adds little clarity to an already muddled debate.
A co-op is a member-owned group that assembles a network of salaried providers and negotiates payment rates with them. Membership is voluntary; consumers decide whether a co-op's costs, coverage, provider networks and other features are superior to those of private plans.
Unlike a private insurer, which must produce profits for it shareholders, a non-profit cooperative directs its money toward salaries and improving the quality of care. Health co-ops provide a broad range of coverage, employing a number of specialists who are easily accessible to patients and typically deliver good service.
There was a sizable number of health cooperatives in the 1930s, but most of them collapsed, either because they were unable to compete effectively or because tensions between doctors and consumer-oriented governing boards could not be resolved. But a select few, including Group Health Cooperative of Puget Sound in Washington state, have flourished.
"The fact that not many exist now shows us there's not a viable model to compete with private insurers," said Timothy Stoltzfus Jost, a law professor at Washington and Lee University who has written on health care policy. "It's effectively a diversion, as far as I'm concerned."
Health policy experts say the cost of joining a cooperative may be no cheaper than private insurance plans like Blue Cross Blue Shield or United Health Care. A central aim of the co-op, they say, is to create a competitive market that will offer better quality care at a lower cost -- and force private insurers to be more efficient and fair.
"This is really an effort to make the private market work more efficiently and to change the rules of the private market so that insurance serves people's needs better," said Elliot Wicks, a health economist with Health Management Associates in Washington, D.C. "Insurers compete on the basis of price, and so if a health cooperative lowers its price, it will bring down the prices for everyone in the market."
Still, Wicks said, the term cooperative is a "vague notion" and the success rate among them has not been high.
Robert Zirkelbach, a spokesman for America's Health Insurance Plans, said the alternative being thrown out by the administration raises many questions.
"How is it going to be structured? What are the rules? And will there by competition?" he asked. "Would this entity have the full backing of the U.S. government? If so, then you're not going to have an equal playing field. There won't be fair competition.
"And would the government ever allow this entity to fail? If so, then you'd have the health care version of Fannie Mae and Freddie Mac," Zirkelbach said.
The idea of a co-op alternative to a public health insurance plan originated with Sen. Kent Conrad, D-N.D., a key member of the Senate Finance Committee. He proposes private, consumer-owned, non-profit cooperatives that would be offered to the public as one of several health insurance choices, including employer-sponsored and private plans.
"Similar to the electric, telephone and farm cooperatives, these health care cooperatives would operate as non-profits owned by the consumers and could deliver better health care outcomes for lower costs," Conrad said in a posting on his Web site.
He has suggested that each co-op would need at least 500,000 members to operate successfully, and that the government would provide up to $6 billion to get them started. After a few years, the government would turn over all operations to the co-ops' governing boards, and the co-ops would become self-sustaining.
Conrad points to the Group Health Cooperative as a potential model for a national program.
The private-sector insurance cooperative, which has 26 medical centers throughout Washington and one in Northern Idaho, pays its doctors by salaries -- rather than by individual visits or procedures -- and allows clinicians to earn bonuses of up to 20 percent for high-quality performance, according to Group Health spokesman Mike Foley. As a result, he said, doctors are less likely to order unnecessary tests, and patients have greater access to physicians through same-day appointments and through e-mail and phone communication.
"We have shown through a recent study that providing more primary care and by being proactive, people are less likely to show up in the emergency room," Foley said.
The co-op is governed by its patients, some of whom serve directly on a board that decides program benefits. Foley said the cooperative creates competition because its services and low costs "end up bringing down costs for the whole market."
Conrad said cooperatives have bipartisan appeal.
"It is a competitive delivery model that could compete with private, for-profit insurance companies, but at the same time it is membership-owned and controlled, not government-run. That's the strength of this idea. It appeals to both sides," he said.
Linda Douglass, communications director for the White House Office of Health Care Reform, declined in an e-mail to elaborate on details for a potential cooperative plan being drafted in the Finance Committee. But she said, "We look forward to discussing it further with the committee."
She said President Obama has never been opposed to considering alternatives to a government-run health plan.
On Sunday, Health and Human Services Secretary Kathleen Sebelius said Obama would consider accepting insurance cooperatives, and that a nationalized program isn't mandatory, even though he once touted it as critical in achieving health care reform.
And Obama played down the importance of a government-run program Saturday, telling constituents at a town hall meeting in Grand Junction, Co., that "the public option, whether we have it or we don't have it, is not the entirety of health care reform."
Sebelius' comments were a noticeable change from the administration's earlier calls for a government-run program that would provide coverage for the nation's 50 million uninsured -- remarks that hinted that a "public option" may not score the 60 votes needed to pass in the Senate.
But several Democratic lawmakers oppose a co-op program as an alternative and say a government-run insurance option is a vital element of shaking up America's health care system.
And House Speaker Nancy Pelosi said Monday that "a public option will keep insurance companies honest and increase competition," and that a government-run insurance plan is "the best option to lower costs, improve the quality of health care, ensure choice and expand coverage."
"The public option brings real reform to lower costs over the 10-year period of the bill," she said.
But Sen. John Kyl, R-Ariz., told reporters Tuesday that the non-profit co-op and a government-run option are basically the same thing, and he doubts cooperatives will win Republican support.
"It's [the same thing] by another name, it is a Trojan horse," Kyl said.
Republican National Committee chairman Michael Steele echoed Kyl's sentiments on Tuesday, saying, "'health insurance reform' or 'health care reform,' 'co-ops' or 'public option;' no matter what he calls it, no matter how he tries to dress it up, he can't escape the fact that his government-run health care plan would increase costs, increase taxes, increase the deficit and reduce health care choice and quality."
The Associated Press contributed to this report.
Cristina Corbin is a Fox News reporter based in New York. Follow her on Twitter @CristinaCorbin.