Sen. Kent Conrad, D-N.D., recently introduced the idea of non-profit insurance cooperatives as an alternative to a government-sponsored public insurance option in Democratic proposals to overhaul the nation’s health care system. Many Republicans and health insurers oppose the idea of a government-run approach, charging that it will be an unfair competitor to private health plans.
Under Conrad’s idea, individuals and businesses would be able to join together to purchase health insurance in the form of non-profit co-ops. These entities would then compete with private insurers in the marketplace. While the notion is fresh to the current Capitol Hill debate, it’s not a new model. Take Group Health Cooperative in Seattle. With its 600,000 members, it’s the third-largest insurance plan in Washington state. And the organization has gained so much recent attention that its CEO met last week with Conrad to discuss the concept further.
Jenny Gold asked Pam MacEwan, Group Health’s executive vice president for public affairs, how their co-op works and what has made it successful.
Q: Tell me a little about the Group Health Cooperative.
A: We are a coordinated care organization like an HMO. We began as a cooperative 60 years ago, so that we’re actually capitalized by the members and they set up cooperative governance. They decided not to run the organization as a true co-op so we’re kind of a hybrid. We have care delivery like Kaiser [Permanente]. We have 23 clinics. We have doctors. We have nurses. Then we also do the financing of health care, so we have the insurance mechanisms as well. That whole operation is governed by consumers, and that’s the part that’s really unusual about Group Health.
Q: What are the distinguishing characteristics of that governance structure?
A: Our board of trustees is made up exclusively of consumers of the organization. To be on our board, you have to be a patient who receives care in Group Health and you have to elected by other consumers of Group Health. We have elections every year for three to four members. To vote in the election, patients have to sign a form that says they want to be a voting member.
Q: How does it change things to have patient members on your board?
A: It changes the accountability of the organization. It’s in our DNA that we’re immediately accountable to our consumers. We’re much more transparent. Our information is much more open. Our meetings are more open. We are very aware that what we put out is going to be under the scrutiny of members–our financial performance and the care we provide or don’t provide. There’s a sensitivity throughout management about this transparency and accountability. So I think we make different decisions.
Q: Are your rates similar to a private plan?
A: Yes they are, because it costs what it costs. We like to think we’re a little more affordable. But one of the things we’re always striving for is to be much more affordable. And one of the issues for us is our state is one of the lower paid [in terms of health care costs]. So the whole state of Washington is relatively efficient compared to the rest of the country, and we like to think that in that in that efficient state, we’re efficient.
Q: Is it a profitable company?
A: We have been. As of late, we’ve done very well. We make a [profit] margin, and the margin goes back into the organization. It’s not paid out to shareholders. It goes into rebuilding clinics, buying medical equipment–it goes back to the members.
Q: Is your payment structure the same as private insurers?
A: Pretty much. The issue is that there are only so many disadvantages we can take on compared to the rest of the market because otherwise we would attract all the more expensive risk. So we tend to follow the same rules. Also, we’re regulated just like everyone else is regulated, and we have to live and abide by the same regulatory framework. So I think the difference in the governance and the way we approach things is felt more in the patient experience and what we emphasize in care. We’re more focused on preventive care, wellness, the patient experience and coordination of care.
Q: How does your quality compare?
A: Our quality is very good. That’s a high, high priority for us, and we’re really competitive.
Q: Where do most of your patients come from?
A: Most of our patients are from large and medium sized groups. After that, the next largest category might be Medicare. Then we have small business, individual, Medicaid, and Basic Health, which is the state low income plan.
Q: How does it feel to be held up as a possible model for national health care?
A: It feels great. We’ve felt for a long time that this is really the way to do health care and that what we need is a system in which the incentives support our approach to health care. The fee-for-service system that has been dominant for the past many years we think produces the wrong things and the wrong values.
[On the national scale, the model] could work if the incentives are right. It depends on how we want to approach health reform. We would like to be a choice and continue to exist as an important option for consumers in health care. We don’t think that everybody needs to do health care just the way we do it, but we think we’re an important option.