So now we have insurance co-ops.
Just what was a co-op, again?
The latest U.S. Senate proposal for health insurance reform released Wednesday relies on co-ops to expand coverage rather than a vilified “public option” government insurer.
Problem is, few know what a co-op is, and many who do don’t believe it’ll work. The weaker fallback plan is still hurting for lack of true champions. Many experts see co-ops as too feeble to achieve much reform and too expensive for the government to launch.
“I think the structure’s too weak to get the job done,” said Dr. Selvoy Fillerup, an Arizona physician who has written extensively on health care reform. “And I haven’t seen any proposal that makes it strong enough.”
A “public option” government plan, still favored by Democrats in the House, would create a new government health insurance agency. It would have the price-setting clout and administrative power of programs such as Medicare and Medicaid, and pay claims directly.
As explained by backers so far, it would compete with major names such as Cigna or WellPoint in offering insurance to everyone, not just the elderly or the very poor.
Taking big steps back
The co-op proposals, though sketchy so far, would take big steps back from that kind of muscular government organizing and buying power. Federal money — $6 billion, based on the plan unveiled Wednesday — would help the initial startup of regional co-ops owned by the members who sign up for the plans. Boards, plan offerings and other rules would, in theory at least, be controlled by the voting members.
The co-ops would use any buying power they could muster to negotiate contracts with doctors, hospitals and other local providers. In doing so, of course, they would compete directly with dominant local carriers with decades of experience negotiating such discounts.
“It’s not good public policy, and it’s clearly an attempt to punish the insurance industry” with subsidized competition, said Bill Lindsay, a Colorado benefits expert who served on the Blue Ribbon Commission for Health Care Reform. “I don’t see how it serves another value than that.”
Co-op supporters say the private health insurers need some prodding and that successful co-ops may force all local insurance companies to provide better and cheaper care.
“A lot of lessons”
“The way we deliver care today, there are a lot of lessons that can be applied” to others, said Michael Foley, spokesman for Seattle’s Group Health, one of two World War II-era co-ops thriving in the United States.
Group Health was an early adopter of such now-fashionable ideas as electronic medical records and paying doctors for preventive care rather than just expensive procedures.
Yet Foley acknowledged that “the most important part of what we do” is controlling doctors and clinics in-house through salaried positions, a model it would take new co-ops years, if not decades, to copy.
Most experts agree that because co-ops are not mandatory for anyone, it would also take years for co-ops to accumulate enough small businesses and individuals to have any cost-cutting power in the marketplace.
Some observers take hope from almost-co-op structures, such as Rocky Mountain Health Partners of Grand Junction, which has been hailed nationwide for reducing Medicare costs by up to a third and extending prenatal services to uninsured mothers.
Grand Junction is pleased with the praise but points out that Rocky Mountain is a traditional health maintenance organization, not a member-owned co-op, said marketing director Kayla Arnesen. Some cost-cutting aspects of the plan might be replicable, while others may result from the community spirit and relative isolation of a medium-size city such as Grand Junction.
Federal and local studies have shown that co-ops and similar structures have not been able to meet the primary goal of their creators: offering health care at significantly lower premiums than existing public or private competitors.
New co-ops struggled to enroll enough clients to negotiate better prices; providers could ignore the co-ops and find patients through existing insurance plans; and the co-ops tended to attract expensive patients who had no hope of getting insurance elsewhere.
The government encouraged health co-ops in the 1930s and ’40s, before the nation’s largest corporations had fully established the concept of employer-provided insurance. Group Health survives, along with HealthPartners in Minneapolis.
Those co-ops now, though, most closely resemble the nonprofit Kaiser Permanente plans around the nation.
All control costs in part by employing doctors directly and using extensive medical data from members to assess treatments and drugs, while emphasizing primary care over emergency procedures.
Able to offer similar savings
Washington’s insurance commissioner says Group Health premiums average a few percentage points lower than those of surrounding insurers. Again, though, Kaiser is often able to offer similar savings where it competes, using its in-house doctors and clinics.
The new federally sanctioned co-ops would be one menu offering in another confusing reform term: “exchange.” Exchanges are one-stop shopping centers where existing insurers offer minimum policies at competitive rates for consumers to choose.
California tried such exchanges, even adding in collective negotiating powers that began to resemble the current co-op proposals. They didn’t work, either, said Marian Mulkey, senior program officer of the think tank California HealthCare Foundation.
“You still bump into these same questions: Who is going to enroll, what kind of risk profile do they have, what does it take to manage their care and find the providers they need?” Mulkey said. “It’s really a struggle to provide intelligent commentary on these things when you don’t really know what they are. It’s fair to say putting these kinds of organizations in place is a very slow process.”
Michael Booth: 303-954-1686 or mbooth@denverpost.com
How a health care co-op might work
1
Regional groups of employers and community leaders would use federal subsidies to set up an administration. They would negotiate benefits, prices and rates with local health care providers.
3
Initial members would probably be employees of small and medium-size businesses, as well as families buying policies with new federal subsidies.
3
Members own the co-op. This eliminates pressure to make a profit and orients benefits toward member needs.
4
The co-op could, in theory, keep premiums down by emphasizing preventive and primary care for members rather than expensive emergency visits or procedures. Uniform electronic records would speed care and help reduce unnecessary treatments.
5
As the co-op membership grows, its market clout to reduce rates and control costs grows accordingly. Some co-ops might eventually employ doctors and run clinics in-house to control costs, as Seattle’s Group Health and Minneapolis’ HealthPartners already do.
