I’ve been gearing up to write something on how cooperatives should be a part of the healthcare reform conversation. They combine internal accountability to consumers with market-based competition, and they could be a valuable compromise. Rather than a government-run “public plan,” not-for-profit cooperative insurers could increase competition and decrease the need for government involvement.
But before I could pull my usual voice-in-the-wilderness schtick, something amazing happened: Senator Kent Conrad (D-N.D.) floated a proposal to encourage the development of co-ops. That isn’t unheard of; every once in a while an elected official will sponsor a bill that encourages cooperative solutions to whatever ails the nation. Just this month, Sens. Russ Feingold and Susan Collins cosponsored a bill encouraging businesses that already self-insure their employees to form cooperatives. They noted that there are already 60 healthcare consortia of this sort, which “represent more than 7,000 employers, and approximately 25,000,000 employees and their dependents.”
What is amazing is that Sen. Conrad’s idea has legs! The Washington Post reported that it “dominated a closed-door meeting of the Senate Finance Committee, one of two panels involved in crafting the Senate bill.” This is not surprising, because the G-11 (which is a group leading the Senate’s effort to develop a proposal) realized that the public option doesn’t have the votes, and delegated to Conrad the task of finding a compromise. The ranking Republican on the committee likes the idea, and President Obama reportedly raised no objections when presented with the idea.
There is certainly going to be opposition to this bipartisan proposal (many comments on a Conrad interview decry this as a “cop-out” to the Republicans), and there may even be good reasons to take a different approach. Nevertheless, it is very good news that a cooperative solution is being considered. Whatever happens, this will get the concept before the public, which will help to start conversations about how citizens can work together to improve their healthcare access, regardless of what government does.
Indeed, one of the idea’s weaknesses is that co-ops need to come from the grassroots, and there is some risk of creating something that is either dependent on government or quasi-governmental. History is littered with false cooperatives, and we must beware of the Venezuela experience. Fortunately, Conrad seems to know this: “The way co-ops typically are formed, people who feel they’re not appropriately served, or not served at all, band together. They form an organization, elect a board, hire people to do the work, pool their money, and the organization goes forward.”
In any case, there is a large unmet need for medical services, and barring universal healthcare or the arrival of benevolent aliens with phenomenal medical coverage (equally probable scenarios), we should be looking at models of how to cooperatively meet our needs. Here is a sampling…
Several articles have made cryptic references to “Puget Sound,” which is the location of Group Health (with 600,000 lives covered). Health Partners is a consumer-owned and democratic HMO, with 400,000 members in the Minneapolis-St. Paul area, founded in 1957.
In the interest of avoiding intense regulatory burden, some cooperative projects don’t claim to be insurance. For example, the Ithaca Health Alliance started as a way for people to gain some affordable security through pooling their money in a cooperative fund; they recently opened a free clinic for members.
Some cooperatives restrict membership. For example, Farmers’ Health Cooperative is only open to farmers in Wisconsin. There are at least two large Christian healthcare cooperatives that limit membership by religion (sometimes with the rationale that moral behavior is good for one’s health). And takaful is a widespread Islamic practice that translates as “guaranteeing each other.”
Not all cooperatives are consumer-based. Wisconsin Rx was formed by employer groups to negotiate better deals on prescriptions, and has now gone nationwide. The Alliance insures 80,000 individuals through their 160 workplaces; it has counterparts in eight other states, and 25 states permit these sorts of arrangements.
Clearly Sen. Conrad’s proposal has a lot of potential, and the more we know about previous experiences of cooperatives, the better we will be able to make a decision about whether to pass law in this direction, and then how to proceed with actually setting up cooperatives on the state level.
The National Cooperative Business Association provides a broader list of cooperatives in the healthcare field. These include pharmacy cooperatives that allow independents to compete with the chains, purchasing cooperatives used by hospitals to buy their supplies, and worker-owned home care and nursing cooperatives. While not directly related to the topic at hand, they are still useful background information.
We should also study models around the world, which are connected through the International Cooperative and Mutual Insurance Federation. ICMIF is divided into three regions, including AAC/MIS, a regional association of 55 insurers from throughout the Americas. It claims development of more cooperatives as part of its mission, so presumably they are standing by to help. Not all ICMIF members are health-related, but certainly we could learn a thing or two as we try to figure out how to cooperatively solve the healthcare crisis.