The Republicans are worried about Obama's proposals for reform of our health care finance system because it might be unfair to private insurance companies:

Five senior Republican senators, including Charles E. Grassley of Iowa, the senior Republican on the Finance Committee, and the minority leader, Mitch McConnell of Kentucky, warned the president on Thursday that the public option would face opposition from many Republicans.

In a letter to Mr. Obama, they said that “forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition.”

Which position is interesting, to say the least, since the Republicans have always preached to us that free market competition is superior to government activity. Doesn't it always provide better quality at lower prices and so on? And if it cannot deliver the goods then what is the point? Is health care a jobs program for MBAs and financiers?

But Wonks Anonymous must note here that they do have a point, however small. Anyone in health care knows that the reimbursement system for Medicare is seriously flawed. Medicare regularly fails to pay reasonable compensation that accounts for the fixed costs of running the health care system. Medicare reimbursement rates to physicians and hospitals are set by legislative fiat and too often these rates are set with budget targets rather than actual costs in mind.

Health Care providers make up for underpayment by raising charges on people with private insurance or no insurance. Any expansion of government paid health insurance will need to deal with this. Real Single Payer will require real negotiations over payments to providers.

Reforms in our current provider payment system should emphasize compensation for patient counseling and education over the performance of medical services, per se. Ideally larger groups of providers, working with hospitals, - that would be health care producer cooperatives - might provide integrated health services in return for reasonable capitation payments from the government. Consumers could elect this type of plan or choose the more conventional, fee for service, alternative.

This would be like HMOs except that the cooperatives would be required to produce actual health care. No insurance companies need apply.

To keep things simple, emergency or other care for people covered by the cooperatives would be paid for by the government and deducted from the cooperatives capitation payments. There would need to be some kind of a stop loss provision for expensive cases, burns, premature births and so on.

Wonks Anonymous does not expect to see any of this in the current health reforms and will be happy if we just begin to get some small changes that extend care and gradually provide competition for our dysfunctional health insurers. Still there is no law against dreaming.