Co-ops plan emerging as possible key to health-care compromise

WASHINGTON (CNN) - A proposal to create privatelyoperated
health-insurance cooperatives as an alternative to a government-run health plan is gaining steam in the Senate, several key senators said Wednesday.

The plan is shaping up as possibly the most viable way to bridge a key difference between Democrats and Republicans negotiating a health care overhaul, senators said.

The non-profit co-ops, based on the model of electricity, agricultural and other cooperatives in rural states, would be run and paid for by its members, although an initial infusion of federal funds might be needed to get them off the ground, senators said.

"I'm doing all I can to get a bipartisan solution, and right now the so-called public option is being transformed into a private alternative," Senate Finance Committee Chairman Max Baucus, D-Montana, said as he left a closed-door meeting on the issue. "It may not work. If so, we'll have to find something else. But right now it looks like it has a decent chance of working."

Baucus tasked two senior Democrats - Charles Schumer of New York and Kent Conrad of North Dakota - to develop legislation that might be acceptable to enough lawmakers from both parties to pass.

When Conrad first developed the co-op proposal, Schumer balked at it, arguing co-ops might struggle to compete with big health-insurance companies and therefore would not help drive down costs. But after meeting with Conrad and other health negotiators Schumer said he would see if they could craft a workable plan.

Baucus said President Barack Obama was "interested" in the co-op idea when they discussed it at the White House Wednesday morning.

Asked if the proposal was emerging as the key to a health care compromise, Sen. Charles Grassley of Iowa, the top Republican on the Finance Committee was cautiously optimistic.

"It's got possibilities. But it's too new and there were a lot of questions raised about it - not outright objections - in our caucus but a lot of questions," he said.