Healthcare cooperative history

It seems that a national debate on healthcare cooperatives has begun, sparked by a proposal from Sen. Kent Conrad to create not-for-profit cooperatives to compete with investor-owned companies. My last post exaimined current models of cooperative healthcare; I would like to use this post to examine historic models.

My account is a simple summary from “American Cooperatives” by Rep. Jerry Voorhis, who served in Congress from 1937-47 (before losing to Richard Nixon), and later served as the Executive Director of the Cooperative League of the U.S.A. (now called NCBA). The book was published in 1961 by Harper, and provides a fascinating glimpse into a time when cooperatives were a mainstream alternative to both communism and red-baiting. 

The book is out of print and hard to find, but an electronic version is available through www.questia.com. The trial subscription should last long enough for you to read this chapter (also, the chapters on electricity and oil cooperatives are also especially good and the chapter on consumer cooperatives is simply mind-blowing). But I digress.

The first known medical cooperative was founded in 1851 by French immigrants in San Francisco; they built a hospital and established a prepayment plan. Other immigrant communities followed suit. In 1882 railroad workers organized to have medical care included in their compensation. In 1913, New York garment workers set up a health center through their union.

The modern cooperative health movement began in western Oklahoma in 1929, when a doctor realized that local farmers couldn’t afford medical care and had no easy access to a hospital; doctors could not be attracted to the area for financial reasons. So he led the community to pool its money and build a regional hospital.

In the middle of the last century, a number of healthcare cooperatives were launched. By 1960, five million Americans had cooperative healthcare. Group Health Cooperative, which has been repeatedly referenced by Sen. Conrad and others (sometimes mistakenly called “Puget Sound”) has survived to the present. The Group Health Association of Washington D.C. was organized by federal employees in 1937. It was open to anyone, and by 1960 served 45,000 people in the nation’s capital.

During the 1940s, dozens of small midwestern towns organized cooperative hospitals. Unfortunately, many of these set their dues too low and were later taken over by their municipalities; even so, this still provided medical services where none had existed before.

Successful cooperatives were launched in St. Louis, Philadelphia, Chicago, Detroit, and Seattle. Miners and other workers organized medical co-ops through their unions. In some cases, doctors created hospitals that were cooperatively owned by the doctors themselves. These diverse cooperatives founded the Cooperative Health Federation in 1946, to help learn from each other and spread the model.

It all sounds rosy, but at some point we have to ask what happened? One clue is in found in the history of the federation: In 1959, it merged with the American Labor Health Association, to create the Group Health Association of America. That merged with American Managed Care and Review Association, and that merged with the Health Insurance Association of America (confused yet?) and the whole thing is now called America’s Health Insurance Plans (AHIP), whose members insure 200 million of us. In other words, the health cooperative movement got assimilated into the medical establishment, which is now the main industry player in the whole healthcare reform debate.

It would be interesting to remind AHIP that its great grandma was a cooperative federation; even without making that connection, AHIP may very well glom onto the co-op proposal as a way of avoiding the dreaded public plan.

I don’t know for sure, but I suspect that a lot of the cooperatives were lost in the usual way that businesses die out over the years. Unless they are part of a vital movement that helps replace them, they eventually disappear as a movement. I suspect that the federation mergers yielded an organization that was progressively less interested in cooperatives, and this undermined new co-op development.

Unfortunately, Voorhis’ is silent on what happened after 1961, and I haven’t yet located a comparably detailed history of the last half century. I don’t suppose that the folks at AHIP have any useful archives that they might share…

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2 Responses to Healthcare cooperative history

  1. norris hall says:

    My concerns about creating healthcare cooperatives is that eventually they will morph into for profit organizations or get taken over by insurance companies. Because they are non profit it is often hard to keep the machine running . Employees still want to get paid…and well, executives feel they are being shortchanged compared to private CEOs and press for ways to increase income in order to justify higher salaries. Pretty soon the mission of supplying healthcare to Americans at the lowest price gets sidelined.

    When Credit Unions got started they were limited to members of a certain group and their mission was to offer their members lower rate loans and better options than the big banks. That worked for a while. But now anyone can join a credit union and their rates are no better than a banks.

    In a capitalist society it’s very difficult for non profits to survive unless they are heavily staffed by volunteers who are dedicated to their mission…like the Salvation Army.

    Republican senators, who enjoy an excellent taxpayer supported healthcare system themselves, are loathed to extend those benefits to the rest of us. They feel strongly that public money shouldn’t be used to support medical care…except when their own healthcare is involved.

  2. coopgeek says:

    Thanks for commenting. You raise some very important issues, and any co-op plan will need to include fortifications against those who will try to take them over.

    I’m not sure where you get your information about credit union rates, but I think you might be making an unfair comparison due to economies of scale. Is it based on comparison of banks and credit unions of the same size? Here are a couple of resources that document savings:
    http://www.adrchallenge.org and https://www.golden1.com/AboutUs/FinancialBenefits.aspx

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