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WILL HEALTH CO-OPS WORK?

Some are efficient and popular but a national version's questionable.

Health care cooperatives have emerged as last-minute substitute for the much-maligned "public option."

But what are these co-ops? How do they work? And can they force other insurance providers to provide lower cost coverage?

The nation's two largest co-ops are based in Seattle and the Minneapolis suburbs. Both offer care by their own doctors in clinics (and in some cases hospitals) operated by the co-ops and covered by the co-ops' own insurance plans.

Not-for-profit HealthPartners in Bloomington, Minn., was formed a half century ago and now has about 1 million members that it serves at 70 facilities in Minnesota and Wisconsin.

Mary Brainerd, the CEO of HealthPartners, told CNN recently, "Making sure health care is affordable is a very big deal to a co-op. ... There's no value to our membership in having high administrative fees, so a big focus is on putting the dollars into health care and not administration."

HealthPartners has administrative costs that are half those of the average private insurer, according to CNN.

It uses generic drugs, another big cost-saver. Both co-ops use electronic records, reducing paperwork, and put an emphasis on preventive care.

In the late 1990s, HealthPartners implemented a program that paid doctors mainly based on productivity, according to the Commonwealth Fund. Costs dropped 20 percent over four years as productivity rose 38 percent.

But it took years for these co-ops to achieve the size that helps make their cost savings possible. Group Health in Seattle began in 1947 and now has 600,000 members.

Consumer Reports rates Group Health as the nation's best HMO, based on membership-satisfaction surveys. But premiums have risen sharply in recent years, according to the Seattle Times though more slowly than its two largest private competitors.

Without that size, some experts say the co-ops would not make a meaningful contribution to the health reform package.

"They're like bringing a knife to a gunfight," David Knott, at consultancy Booz & Co., told the Chicago Tribune.

North Dakota Democratic Sen. Kent Conrad, the chairman of the Senate Budget Committee, is one of the strongest proponents of the co-ops. He has said he could create a national co-op with 12 million members "that would be the third largest insurer in the country and be a very effective competitor."

That would be impossible without significant federal money to cover start up costs associated with creating a health network from scratch.

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