Health Co-Ops Touted As Alternative To Public Plan
The Obama administration appears to be backing away from the idea that a health care overhaul has to include the option of a government-run insurance program. If this public plan is removed from the bills currently under construction in Congress, it could be replaced by nonprofit health insurance plans run on the co-op model, where people who buy the insurance are the ones who own the insurance company.
Sen. Kent Conrad (D-ND) is pushing for health co-ops; he sees them as a way to provide competition to conventional insurers without the political negatives of a government-run plan.
But health co-ops as part of a nationwide health care fix are controversial. Robert Laszewski, who heads a Washington, D.C.-area consulting firm, says, "I think they're the single dumbest idea I've heard in 20 years of being in Washington and working on health care policy."
Laszewski says there's no need to promote co-ops. They can already form on their own. As for the nonprofit advantage, he says there are plenty of nonprofit health insurers around, including many of the Blue Cross/Blue Shield plans. The only difference is that they're run by board members who are appointed, rather than elected. Laszewski says any kind of new insurer will need a lot of cash on hand to line up doctors and hospitals willing to treat patients, and to set up health IT and billing systems.
"Actuaries have figured it will cost about $6 billion to establish the insurance reserve requirements that cooperatives will need, and 12 million people will sign on," Conrad said in an interview with NPR on Monday.
"Those of us who have to count votes know that the public option does not have the votes," he says. But he's confident he can get the votes for co-ops.
But how exactly do health co-ops work? NPR spoke with Pam MacEwan, executive vice president of public affairs with the nation's oldest health cooperative, Group Health Cooperative. Group Health covers 11 percent of the health insurance market in Washington state. It offers various types of insurance, at average or just below average prices. Its HMO was recently ranked the nation's best by Consumer Reports magazine. Here are some excerpts from the interview, edited for clarity:
How does Group Health work?
We are a nonprofit organization, and we're cooperatively governed. The members, that is, the patients, actually elect the board of trustees, and each of our trustees receives care here.
What does that mean for someone who buys health insurance from Group Health?
We consider you a member, and you're eligible to vote in the organization, and you have a say in how we organize care and design benefits. Our members participate in reviews of grievances and in discussion about the benefits packages. Most of the work is done by the board of trustees that's elected by members.
What kind of care do members of Group Health get?
We have really different kinds of packages. You can buy individual coverage for your family with a high deductible that would look very much like any other insurance package. We offer full coverage through employers and Medicare Advantage plans. Some people purchase a policy that allows them to go to any doctor; other people purchase something that's a little more restrictive that just allows them to go to Group Health doctors.
So how would a member feel the difference?
You would feel in control; you have access on e-mail to your doctor; you can make appointments on e-mail; you have access to your medical record. Overall, there's a sense of transparency, with you being in the middle and calling the shots.
Would member-run health co-ops work as part of the overhaul plan in the place of government-run health plans?
I would need to know much more about how they intend to put the cooperative plan together to know if that will be the answer to how we design public plans.
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STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep. Renee Montagne is back from Afghanistan. She's in our studios. Welcome back, Renee.
RENEE MONTAGNE, host:
Thanks, Steve. Glad to be back.
INSKEEP: And you've come back in the middle of a debate over health care.
MONTAGNE: Which was - you might be interested in knowing - loud enough that I could hear it halfway around the world. And you think they're fighting in Afghanistan.
(Soundbite of laughter)
INSKEEP: Well, they certainly are fighting in Washington. President Obama's administration wanted a public insurance plan to compete with private companies. But now, facing harsh criticism, some lawmakers are turning to an alternative, which we will discuss this morning. It's called a health insurance co-op.
MONTAGNE: And conservative broadcasters like Rush Limbaugh are denouncing that, as well. So, this morning, we'll ask what co-ops would actually offer. NPR's Joanne Silberner has that story.
JOANNE SILBERNER: Robert Laszewski once ran an insurance company. Now he's a consultant to health insurers and health care provider organizations. He says health cooperatives won't improve the nation's health care system.
Mr. ROBERT LASZEWSKI (Health Care and Insurance Consultant): I think they're the single dumbest idea I've heard in 20 years of being in Washington and working on health care policy. You know, there's this old story about the committee that gets together to design a horse and they end up having designed a camel. This is a camel if there ever was one.
SILBERNER: But nonprofit health co-ops have their fans, like Karen Davis, head of the nonpartisan Commonwealth Fund.
Ms. KAREN DAVIS (Director, Commonwealth Fund): Health co-ops are a good way to deliver care. It's running health care for the benefit of patients instead of the benefit of shareholders. We have good models in the U.S. of co-op health care. They've taken 50 or 60 years to really thrive, but they deliver top quality care at a reasonable cost.
SILBERNER: Maybe at this point, it would help to know what a health co-op actually is. Group Health Cooperative in Seattle is one of two co-ops that have been around for decades. It's just been rated the number one HMO in the nation by Consumer Reports Magazine. Pam MacEwan is the senior vice president at Group Health.
Ms. PAM MACEWAN (Senior Vice President, Group Health): We're a tax exempt nonprofit. And we are cooperatively governed, which means that the members, the patients actually elect the board of trustees, and each of our trustees receives care here.
SILBERNER: In some ways, Group Health acts like any other health insurance company.
Ms. MACEWAN: We have really different kinds of packages. You can have people buy an individual coverage for their family with a very high deductible that would look very much like any other insurance package.
SILBERNER: Or employers can purchase different types of insurance, just like they do from Aetna or Cigna. And two-thirds of Group Health's members opt for a system where members get their care from doctors who are on salary and who work at Group Health clinics and offices. The American Medical Association supports co-ops - at least in theory - as a way to get more people covered. And Democratic Senator Kent Conrad of North Dakota, who has pushed the co-op idea as part of health care overhaul, says that co-ops could thrive in a new system where insurers are encouraged to focus more on quality of care.
But consultant Robert Laszewski says there's no way a new insurance company is going to be able to do what a government option is supposed to do: provide enough competition to conventional insurers to force them to keep their prices down while delivering full services and quality care.
Mr. LASZEWSKI: The co-op with no information technology, no provider network, no existing market share to go to doctor to negotiate decent prices, that's a laugh. That's not going to scare any insurance executives. Trust me. They're just laughing at it.
SILBERNER: And even Karen Davis of the Commonwealth Fund, who likes co-ops, says the proponents are facing a big challenge.
Ms. DAVIS: These are going to be very difficult to establish. They're going to take time. And most importantly, they're going to need clout in the local marketplace to convince doctors and hospitals to be part of their system.
SILBERNER: She says that clout could come from a legislated guarantee that the co-op could pay the lowest fees to doctors and hospitals. Germany has had success with a national board that negotiates prices. But both those approaches are a level of government involvement that the proponents of co-ops have been trying to avoid. And would co-ops help control health costs? It depends on how they're structured. The price of insurance through Group Health and the other big co-op, Health Partners in Minneapolis, it's about average for their communities or just below.
Joanne Silberner, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.
