The past week saw an increasingly disturbing trend of disruptions at events related to healthcare reform. It got to the point that today’s news included a mention that President Obama’s town hall meeting was NOT disrupted (it went on to note that Sen Arlen Specter was booed and then caught up in a shouting match at his own meeting). Egad.
The focus of these conflicts seems to be around what the government is and isn’t going to do, and it seems to be due to misinformation about “death panels” and people being forced to quit their insurance and take a policy from the government. Misinformation is bad, and when it is used to manipulate people into disrupting civil discourse, it is really bad. Of course, it is also really good copy, so the media has been all over it.
Meanwhile, a couple of events passed mostly without notice, which shed light on a possible compromise – the controversial “co-op plan.” Specifically, the National Cooperative Business Association produced a letter and a webinar that can contribute greatly to the general level of knowledge on the subject. They should be commended for their contribution to the debate.
These are not a conclusive case for the co-op plan, mind you. NCBA seems to share my cautious assessment of a proposed cooperative development initiative that would be unprecedented in its size, speed, and degree of government involvment (in this country, at least). But they have still assembled a significant body of evidence that cooperatives are worth considering.
Two weeks ago, Senator Jay Rockefeller (R-WV) wrote a letter to the GAO, posing a long but important list of questions that he wanted answered within a week. It was a heckuva list, and I got the sense that he wasn’t seriously expecting a reply, so much as venting his uncertainty through an intimidating pile of rhetorical questions.
I’m not aware of a response from the letter’s recipient, but NCBA took the bait and sent an 11-page response, addressing each of his concerns (except for those for which it was unable to find answers due to lack of specialized research or difficulty in contacting people involved with some co-ops that haven’t survived). The letter shows that the cooperative movement can get things done quickly. I suspect that someone worked over the weekend to produce this summary, which is indispensible to an informed opinion on the matter.
Just in case the folks at NCBA weren’t already busy enough answering the GAO’s mail, they also hosted a webinar on the subject, a recording of which is now available for download. I suspect most people won’t be up for an hour of education, so I’ll share some of the main points.
After a general introduction to cooperatives from NCBA President/CEO Paul Hazen, we heard from Donna Zimmerman, a VP at HealthPartners, which insures 1.25 million members in Minnesota and Wisconsin; they employ 10,000 people at 84 locations, including 3 hospitals (one of which has a trauma unit). What stood out to me was her description of the ways in which HealthPartners’ leadership is accountable to its members: At their annual meeting, they have an open mike in which any member can ask questions of the board or management.
The other panelist was Bill Oemichen; he is president and CEO of the Cooperative Network, which is a co-op federation for the same states in which HealthPartners is based. Its members are 600 cooperatives in all industries, with a total of 6.3 million members. Several of these members are in the health care field.
I was particularly intrigued by Oemichen’s presentation, because it challenged one of the main objections to having a decentralized co-op plan (that is, organizing on the state level rather than a single nationally-based cooperative): One of the biggest challenges to any cooperative will be the need for economies of scale. On the one hand, rapid growth can destabilize any cooperative and especially new ones. On the other hand, without reaching a certain size the co-ops will not be competitive in a rather cutthroat market.
State-based cooperatives will have greater challenges achieving economies of scale, but somehow Wisconsin is home to several operating in different parts of the state. One of these – Cooperative Health Choices – is just being launched to serve the northwestern part of the state, which is both a HealthPartners service area and mostly rural. If a rural part of a state can start a co-op when there is already another huge co-op serving that region (and that is still an “if” since they are just setting up shop) then there is really no reason to doubt that any state could support its own cooperative, provided that there is adequate support for its creation.
Another objection raised about co-ops is that they’ll take too long to work. However, Oemichen said that the introduction of a cooperative to a market has tended to result in immediate improvements throughout the market – even those who stick with their old insurers have often found their service improved and their premiums lowered. Farmers’ Health Cooperative has had noticeable results in a short time, holding premium increases to below eight percent in its first year. This is especially noteworthy because farmers were often refused access to insurance before they organized a co-op. FHC’s success was recently confirmed by an independent survey: In under two years of operation, and with a relatively tiny membership of 2500 high-risk members, more than two-thirds reported improved benefits, generally with reduced or stable costs.
These examples show that small healthcare cooperatives can compete, even at a level approximately 1/10 the size Senator Conrad is suggesting will be needed, and 1/5000 the size envisioned for the overall co-op plan.
None of this removes the challenge of organizing co-ops for every state. It is also essential to remember that Wisconsin has a long history of cooperative organizing; its success is unlikely to be duplicated in, say, Delaware or Nevada.
I still lean toward the national approach (or perhaps several large regions, each including at least one state with a strong cooperative sector) but the evidence from Wisconsin suggests that the state-level approach might also have some legs.
And if we do take a national approach, the break-even point might be much closer than we think.