Congress considers health insurance cooperatives

Examining the latest health care cure-all.

One of the newest ideas in health reform is a very old concept that’s worked for dairy farmers, outdoor enthusiasts and the banking industry. The Health and Science Desk reports on the debate over health insurance cooperatives.

Listen: [audio:090930tecoop.mp3]

In a cooperative people become joint owners of a company, and those member-owners influence how the business is run. Often the advantage is more negotiating power and better prices. Sporting goods retailer REI is a co-op grown very large, your local credit union is an example on a smaller scale. In the health insurance industry, advocates say co-ops could challenge existing companies without becoming a bully in the marketplace.

Stefanacci: They’re more accepting to the co-op because it doesn’t have the same potential power to kind of dictate pricing that a national public option plan would have.

Richard Stefanacci is a health policy analyst at the University of the Sciences. He says co-ops are a compromise meant to satisfy those who oppose the public option, people who want to minimize the government’s role in whatever emerges from the health care remake.

Stefanacci: I that think in parts of the country, outside of Philadelphia, where there isn’t a lot of choices regarding health insurance, I think they make sense.

The overhaul proposal from Montana Senator Max Baucus sets aside $6 billion to launch co-ops across the country. His committee is considering both state-based and regional cooperatives.

Brenner: If they become regional, that means they’re probably going to be regulated by the federal government.

Jeffrey Brenner is a family physician at Cooper University Hospital in Camden.

Brenner: So the question is: If you’re a consumer is it easier to complain to the federal government, or is it easier to complain to the state?

Whether regional or state-based, the co-ops would be much smaller than a national public plan. Brenner says that lack of size and clout worries co-op critics.

Brenner: The biggest concern is whether the risk pool would be large enough, or the size of the cooperative would be large enough to push down prices.

North Dakota Senator Kent Conrad pitched the co-op idea as added competition, competition that could lead to more affordable insurance options; Igor Volsky doubts that notion.

Volsky: The very co-ops that Conrad points to have been unable to lower health care costs have been unable to change the way the medicine is practiced.

Volsky is a health researcher with the Center for American Progress, a Washington think tank that supports the public option.

Volsky: Let’s play this out, so we form a co-op, you and me and maybe 100 other people …

Then, the co-op goes to a large doctors group to win its business.

Volsky: And we say: We’re trying to lower health care costs for our members, and we will pay you 97 percent of what Wellpoint pays you. Well, what’s the incentive for them to be part of your network? After they stop laughing, I think they’ll kindly show us out of their office.

Volsky says a co-op would need to be very large to make any difference. Dr. Jeff Brenner says the most successful co-ops are structured like Seattle-based Group Health. That co-op is both an insurance company and health care provider.

Brenner: So the nice thing about a model like that is that if the providers do a great job delivering care, and it’s cost effective care, or they invent a new program that saves money, it’s all part of the same institution.

Brenner says the Baucus plan offers a few more details but not many.

Brenner: The model being debated in Congress is very amorphous, and when you hear different people speak about it, the definitions and the descriptions are very different.

The co-op idea may morph even more this week. Disappointed Democrats think co-ops are more cop-out than compromise; they’re looking looking to resurrect parts of the public option. Wary Republicans say they’ll make sure that doesn’t happen.