Health Care Co-Operatives as an Alternate to the Public Plan

Health care co-operatives have been one of the ideas floated as an alternate to the public plan for some time now. Finding favor in Baucus's finance committee they have been considered something of a foil to a full blown socialist program, hence the opposition from left wing democrats.

On Capitol Hill, those innovations have made Group Health a prototype for a political compromise that could unclog health care negotiations in the Senate and lead to a bipartisan deal. After a month of brainstorming, including briefings from Group Health executives, the Senate Finance Committee seems poised to propose private-sector insurance cooperatives — instead of a new government health plan — as its primary mechanism for stoking competition and slowing the growth of medical costs.

But state officials say Group Health’s impact on holding down costs has been mixed. And its successes may have less to do with its governance — by a board that is elected by patients — than with its ownership of a vast network of clinics and specialty care centers.

Above all, Group Health’s physicians are paid a salary and can earn bonuses of up to 20 percent for high-quality performance. Unlike most doctors, who are paid by the visit or procedure, they have little incentive to churn patients through and order unnecessary tests and operations.

At Group Health, doctors are rewarded for consulting by telephone and secure e-mail, which allows for longer appointments. Patients are assigned a team of primary care practitioners who are responsible for their well-being. Medical practices, and insurance coverage decisions, are driven by the company’s own research into which drugs and procedures are most effective.

As Congress and the White House debate a national health care overhaul, many in Washington agree that one reason health premiums have grown at four times the rate of inflation this decade is a dearth of competition. In 40 of 42 states studied by the American Medical Association last year, the two largest health insurers claimed at least half of all enrollment.

The question is how best to invigorate the system. Republicans and some moderate Democrats are concerned that competition from a government-run insurance plan would eventually drive private companies out of business and leave government as the sole insurer.

If the bill now being finalized by the Finance Committee includes cooperatives, it could set up a confrontation with the Health, Education, Labor and Pensions Committee, which has written legislation to create a government plan along the lines of Medicare.

Of course these co-operatives can be quite profitable, the key being the doctors become salaried professionals who receive bonuses for higher quality care. Of course the devil is in the details on how much the bonuses should be. Pushed by Democrat Kent Conrad, they would limit government's role and more importantly reduce the expenditures required. That in turn would alleviate the political problems of increasing taxes that the democrats have been stumbling over.