The disagreement between the Vermont Health CO-OP and the state Department of Financial Regulation is a classic Rashomon story: two diametrically opposed interpretations of the same situation. In denying VHC a Certificate of Public Good, DFR Commissioner Susan Donegan found flaws in VHC’s business plan and management structure, a possible conflict of interest at the very top of the company, and an unacceptably high risk of failure. VHC officials assert that Donegan is wrong on all counts, and that, after months and months of consistent communication between company and regulator, the rejection came as a total shock.

It’s hard to believe that the two parties are looking at the same sequence of events – events in which they participated (indeed, cooperated) from start to finish. And honestly, I don’t know enough to say who’s right and who’s wrong. But for me, the bottom line is this:

I don’t think it makes much difference either way.

The Vermont Health CO-OP sounds like a wonderful thing – a member-owned insurance carrier based right here in the Green Mountain State.  It appeals to many of our most dearly cherished self-images.  CO-OP CEO Christine Oliver and Board Chair Mitch Fleischer point out that many other states already have health CO-OPs, established through the Affordable Care Act. And, as a hotbed of co-operative enterprises, Vermont is the best possible place for a company like theirs. (Photo: Oliver and Fleischer at a press briefing last week.)

Except for one thing: In the Affordable Care Act, CO-OPs are part of the endgame. Health care reform is going no farther anytime soon. But in Vermont, we’re on the move to single-payer health care in 2017. If we get to single-payer, VHC likely dissolves. If single-payer craps out, VHC will be a very unsatisfying consolation prize. In fact, given the projected onset of single-payer, one could argue that VHC is an unnecessary risk of federal (read: taxpayer) funds. (The government has agreed to loan VHC a total of $33 million for startup costs and operating reserves. According to Oliver and Fleischer, if VHC goes bust before repaying the loans, the feds are on the hook.)

And while the prospect of a health insurance CO-OP* sounds warm and fuzzy and Vermonty, some of our leading health care reform advocates are decidedly lukewarm on the concept.

*It’s correctly spelled as CO-OP rather than “co-op” because it’s an acronym for “Consumer Operated and Oriented Plans.” These are a product of the Affordable Care Act, specifically defined within that law. This was one of many points of dispute between VHC and DFR: Donegan sees VHC as much more like a traditional mutual insurance company than what we think of as a cooperative. Oliver and Fleischer insist that VHC would behave like a cooperative, with policyholders having a voice in the company’s operation.  

Dr. Deb Richter, family physician and leader of the single-payer fight, told Seven Days:

This is just one more insurance scheme as far as I’m concerned. Not necessary, a lot of fuss, and a waste of time and money.

And Peter Sterling of the Vermont Campaign for Health Care Security told me:

For consumers, [Donegan’s rejection] is not a bad thing. There will be a lot of products on the market. With just MVP and Blue Cross offering products, it’s probably better for consumers.

From his personal experience as a health-care advocate, Sterling has seen plenty of folks who are overwhelmed by health insurance options. He believes that the exchange will ensure a decent array of insurance options while minimizing confusion.

Governor Shumlin doesn’t appear terribly anxious to get in the trenches, either. Last week, Oliver and Fleischer said that Shumlin would help them get a rehearing. And I speculated that Donegan might find herself bigfooted by the Guv. But Shumlin’s more recent statements are much more equivocal. The tanned and rested Peter Hirschfeld reports from behind the Mitchell Family Paywall:

Shumlin Tuesday said the decision on the CO-OP’s future is Donegan’s alone to make, and that he will not encourage her to reconsider the ruling.

“My job as governor is to meet with people when they’re happy or unhappy with state government, and that’s what I did,” Shumlin said. “But this is a regulatory matter, and I don’t get involved in regulatory decisions. And it would be totally inappropriate if I did.”

Sounds like Shumlin’s face-to-face with the VHC principals was a mere formality. And that quote sounds like a kiss-off.

Oliver and Fleischer certainly shouldn’t pin their hopes on a last-minute gubernatorial stay of execution. And Donegan still insists she won’t reopen the case. Which would leave VHC with two unpalatable options: a longshot appeal to the Vermont Supreme Court, or a complete reworking of their business plan and a restart of the DFR application process.

Either option would almost certainly prevent VHC from entering the health care exchange in its first year. And that’s the best opportunity for a brand-new carrier to grab market share. As Fleischer pointed out in last week’s briefing, the launch of the exchange effectively wipes the slate clean, which would give VHC a level playing field (pardon mixed metaphor) with its well-established competition. By 2015, MVP and Blue Cross will have a big headstart – and many consumers will be satisfied with their carriers and not looking to switch.

The situation led Seven Days to describe VHC as “on life support.”  And to me, that’s not a big deal. Because VHC is, at best, tangential to the ultimate goal of single-payer health care.