How to start a health care cooperative
Let’s step back from whether we think that health care co-ops would be an acceptable substitute for a public plan, and focus on how to make them as useful and effective as possible if they are the chosen plan. This will help us to understand whether co-ops really are feasible or just a bamboozle. It is one thing to believe (as I do) that co-ops could be up to the task; to claim that the plan being considered is the way to get there is another kettle of fish.
In particular, let’s look at the co-op development process, and try to determine what would be required to get one of these cooperatives launched. This will be no easy matter, and this topic is my main source of uncertainty about whether the co-op plan is likely to be mostly effective or mostly a train wreck.
A lot of what follows is based on my own experience of co-op development consulting with the Northwest Cooperative Development Center and in other settings, as well as a training I received through CooperationWorks! It is also generally supported by other professionals, including USDA Rural Development, (especially interesting because it provides a glimpse into the government’s current involvement with co-op development, which has funded some of my work), the Cooperative Grocers Information Network, and the Food Co-op 500 project. The latter two guides are designed for food co-ops, but their general process is more or less applicable for the purposes of this discussion, since most food co-ops and the proposed health care co-ops are both consumer-owned. I hope these links are helpful leads for anyone wanting to start any sort of co-op.
I’ve identified several issues that I believe must be addressed. I’m assuming that there are state and regional cooperatives, rather than a single national co-op.
First, the foundation: Co-ops really need to come from the grassroots, so we’ll have to launch steering committees to move the process forward. My hunch is that these should include representatives from other types of co-ops (who can bring expertise during design and their membership bases later), faith communities (many of which have teachings that are complimentary to cooperative economics), groups involved in medical reform advocacy (to keep us focused on meeting society’s needs as a whole), and other social and small business groups. Due to the complexity and size of the task, I would guess that a couple dozen people will be needed in each case. Some of these individuals will be on a steering committee, but most will be on more focused committees devoted to tasks like outreach and legalities.
Related to this, we’ll need members. Lots of members. I’ve been hearing a half million as the critical mass, although I’m not sure of the basis for that, beside being the size of both currently successful models (Group Health and HealthPartners). I suspect that a federation of smaller co-ops could also do quite well by pooling its resources. Even so, I’m (wildly) guessing that we’ll need a couple hundred thousand per state, or more; feasibility studies will be needed. Whatever the number, it will be big, and our efforts might be complicated by lingering resentment that the co-op plan got in the way of a public or single payer plan.
Next, the scope: We’ll need to figure out what each co-op will and won’t do. This will include services provided, as well as geographic scope. These are likely to be determined by law, but I would like to offer some thoughts about issues I see and how the law could be as harmless and helpful as possible. One of the biggest objections that I’ve been hearing is that co-ops would not be large enough to effectively negotiate for better prices. I’ve previously shown some examples of co-ops that have done something like this, but those examples took decades to mature. It will be essential to get our health care co-ops launched as broadly and quickly as possible, without sacrificing the need for solid planning and organizational development. I also hope that the legal framework doesn’t hinder co-ops that want to move beyond simple insurance.
I don’t believe the doubts that co-ops can’t/won’t be big enough, but this is an essential concern that must be always on our minds; these co-ops will need to get big, and do it quickly. To address this concern, I think it would make sense to start with a few co-ops that are each available in multiple states, and then they gradually reproduce by something like cell division. That would make more sense than trying to create co-ops in states without much population or experience, and then adding the step of joining them by federation. This will also solve the problem of states that have a weaker position, either through small population (North Dakota) or minimal co-op infrastructure (Nevada) or both (Alaska). For example, it might make sense for California, Nevada, Utah and Arizona to start together, while Washington, Oregon, Idaho and Alaska work with Group Health to launch their efforts. This could all be done knowing that states would split off as soon they were ready, while maintaining ties for maximum bargaining weight.
Next, the money: Another big issue is going to be the financing, and again we have to wait and see what our lawmakers dish out. We’re pretty much going to have to beg and bother them to move this in a direction that is likely to support sustainable co-ops, by providing enough grants and loans that capitalization is not the main obstacle. But there may also be some potential for other co-op sectors – particularly credit unions – to provide equity. This could be handled through nonvoting preferred shares.
Finally, technical assistance (in which I have a little conflict of interest): It will be very helpful to connect these organizing groups to development expertise, to industry expertise, and to each other. Development expertise and general guidance can generally be provided by members of CooperationWorks! (also a co-op), which has members providing service to most states. Next, we’ll need to learn everything we can from current and historic models (including nonprofits). Finally, we’ll need to network these planning groups, so they can learn together.
This all will be quite an undertaking, but fortunately there is already a network of developers in place. I’m optimistic that we could develop training and planning resources once, so that each planning group can support each other, and move forward together. For example, a manual could be created and distributed at a summit, which would feature a variety of presenters.
There are still a lot of questions to be answered, but I hope this framework is helpful in understanding the road that might lay ahead.