I can't think of a state less equipped to deal with major health insurance rate hikes than Michigan, currently mired with - this will not be a typo - 15.6% unemployment. But that's exactly what they're getting.

In the past few days, 114,000 Michigan households have received bad-news letters from Blue Cross Blue Shield of Michigan, socking individual health insurance subscribers with premium increases averaging 22%, effective Oct. 1.

Blue Cross could have said, "Hey, things could have been worse. We asked for a 56% rate hike first and dialed it back to 22%" -- but that probably would have just made folks angrier.

Instead, the Blue Cross letters simply stated, "We know every Michigan resident faces financial challenges, and we thank you for your business and loyalty to the Blues."

The two numbers, unemployment and rate hikes, have a correlation. Individual insurance has expanded by 96% at Blue Cross of Michigan in the past two years. That's because they act like a non-profit state "co-op" would in a private sector allowed to discriminate against their customers:

In just the past two years, the number of under-65 individual subscribers has grown by 59,000, or 96%, at Blue Cross, the nonprofit "insurer of last resort" in Michigan. Private for-profit insurers tend to cherry-pick younger, healthier consumers, driving older and less-healthy people to Blue Cross if they have no employer-provided group coverage.

State law requires Blue Cross to offer insurance to anyone, but it also demands that the company not lose money on its insurance products. Therein lies the rub: Blue Cross lost $133 million last year on individual subscribers.

This is that "perfect market" that conservatives like to talk about. Given the ability to discriminate over its customers, private insurers dump the sick on to Blue Cross. And because the state requires Blue Cross to break even, they must raise their premiums basically at the rate of the cost of health inflation year-over-year, often on the poorest and most vulnerable members of society.

Michigan is not the only state seeing large rate hikes in its health insurance market. Oregon small businesses are seeing double-digit rate increases this year. In California, policies have gone up 9% since 2007, three times higher than the overall cost of living. Blue Cross and Blue Shield of Rhode Island has proposed a 16% rate hike, with UnitedHealth of New England up 11.6%. Washington state consumers will see large increases as well. Overall, increases by double digits are expected nationwide.

We hear from conservatives that businesses may drop their plans under health insurance reform. Actually, that's virtually assured if nothing is done. Companies, especially small businesses, will have no chance keeping up with these ever-increasing rates and hope to compete in the global marketplace. And ultimately, those businesses who do pay for these rate hikes do so out of potential wage increases for their employees. Wage growth stagnates and people wind up with less disposable income. The money funneled to health insurance companies could be used to reverse the recession and pull us into economic recovery. In this sense, insurance companies are acting like a siphon, reducing the fuel that can be used to drive the engine of growth.

And that siphon will take more and more money out of your pocket, unless we do something now.

As someone recently said, what planet do they live on? Chuck Grassley and Ken Conrad fall all over themselves praising their co-op proposal, while Howard Dean, the Last Semi-Honest Man, calls it out as the political theater it is.

I don't know about you, but I'm pretty tired of these expedient political solutions to real-life problems. After reading Matt Taibbi's latest Rolling Stone piece on health care reform (no link yet), I now understand just how thoroughly the Blue Dogs screwed us on the public option and I would cry no tears if it disappeared in its present form:

(CBS) Former Vermont Governor and doctor, Howard Dean said the health care co-operative proposal is purely for political strategy and has not worked in the past on "Face the Nation" Sunday.

"That proposal is a political compromise, not a policy compromise," Dean said. "No one knows what it would look like and when it has been tried in the past it mostly hasn’t worked."

Dean, a strong advocate for the public insurance option, said people need the choice of a government-run plan to compete with private insurers. He argued that because private insurance companies are investor-owned, they are spending less money on health services and more on equity.

Medicare, Dean said, "is by nature much more efficient" because currently seniors can move, leave their job and get sick without having their coverage discontinued.

"Everybody over 65 has it and the question is 'Why don't we open up that program,'" he said.

[...] Dean said "we are getting pretty mixed signals from Senator Grassley. … I think the Republicans owe it to this country to give us a clearer sense of what they will and will not support."

Senators Charles Grassley, R-Iowa, and Kent Conrad, D-North Dakota, appeared earlier on "Face the Nation," saying that the public option plan would not find enough support in the Senate. The co-op solution, they said, would be the only hope for a bipartisan agreement.

Dean also said the $600 billion dollar House price tag on health care is "reasonable" because it is less than we are spending in Iraq and Afghanistan.

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Rachel Maddow and Kent Jones do a hokie, but apt parody of what dealing with the Republicans on health care amounts to. Kent Jones really doesn't want to order pizza, and the Republicans really don't want any sort of health care reform.

Maddow: Republicans in the United States' Senate are Kent. And we're trying to order pizza. They do say that they want health care reform.

[....]

Because Republicans have said that they want health care reform, Democrats have been trying to work with them to come up with a bill that both sides can agree on. We can compromise. Democrats took national health care and single payer off the table from the very beginning because they were sure that Republicans wouldn't want those.

Then they started negotiating down from there, trying to find something, anything that the Republican would say yes to. But just as national health care was unacceptable to them, and single payer was unacceptable to them, the public option is also turning out to be unacceptable to them. And now even the further watered down reform option of co-ops are unacceptable to them.

[....]

That's a really important moment. Senator Grassley is the top Republican negotiator in the Senate on health care and he just admitted to Chuck Todd that even if he personally gets to draft a bill for the Senate to vote on, even if he ends up with a policy to vote on that he thinks is great, he himself might not vote for it.

Mean while Jon Kyl, the number two Republican in the whole Senate told reporters on a conference call today that dropping the public option still won't get any Republicans to vote for the bill.

No matter what is in the bill, Republicans are not going to vote for the bill. No matter what is on the pizza, Kent doesn't want it.

Maybe it's time for Democrats to take the hint. Republicans don't want pizza. Order exactly what you want. Put together the best possible reform bill purely on the basis of what you think the best policy for the country is, and then, forget the Republicans. Focus on getting all the Democrats in line to vote for it.

The Republicans are not here to help. And Kent is not here to make a good pizza order. Take the hint.

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Ed Schultz talks to Rep. Anthony Weiner about the signals from the White House that a health care bill might not include a public option. Rep. Weiner noted that bipartisanship is a means and not an end to itself, and that they'll lose 100 votes in the House to get a couple of votes in the Senate if the President backs off of the public option.

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This doesn't sound good.

SCHULTZ: And finally, my sources on Capitol Hill—going to health care now, Chuck—are telling me that in the Senate, the public option is in serious trouble.

Are you hearing that?

TODD: I‘ve heard the same thing. You know, in the Finance Committee, Kent Conrad, who‘s the guy that sort of created the idea for the co-op, what I would advise you, Ed, is get to know what this co-op is going to do.

I‘ve talked to some who are big advocates of the public insurance option who believe they can do things within the framework of this co-op that will make folks who are supporters of the public—overall big public option feel better about this. But the fact of the matter is, you‘re not going to get Grassley. You might not get Ben Nelson. You might not get Kent Conrad for anything that‘s called a public insurance option.

And the “co-op” may be just better language to use and easier to sell in some of these places. So, as somebody said, it can walk like a duck, it can quack like a duck. You just can‘t call it a duck. And so, “co-op” may be the language of choice here.

Kent Conrad and Chuck Todd obviously think we're all dumb as stumps.

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Kent Conrad on the Ed Schultz defending his proposal for health cooperatives as an alternative to the public option in health care reform. Robert Reich has more over at TPM.

The Latest Public Option Bamboozle, and How to Recognize the Real Thing:

Nonprofit health-care cooperatives won't have any real bargaining leverage to get lower prices because they'll be too small and too numerous. Pharma and Insurance know they can roll them. That's why the Conrad compromise is getting a good reception from across the aisle, just as Olympia Snowe's "trigger" (whereby no public option until some time down the pike, and only if Pharma and Insurance don't bring down and extend coverage a tad) is also gaining traction.

The truth is that there's only one "public option" that will truly bring down costs and premiums -- one that's national in scale and combines its bargaining power with Medicare, and is allowed to negotiate lower drug prices and lower doctor and hospital fees. And that's precisely what Pharma and Insurance detest, for exactly the same reason.