WASHINGTON – The health reform proposal introduced last month by Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, includes a nonprofit health insurance co-op component. There is precious little detail of what the co-op policy would look like, but the concept is drawing just as much strong opinion as the public option.

A lot of attention is being cast on the handful of existing health cooperatives, including Seattle-based Group Health Cooperative of Puget Sound and Bloomington, Minn.-based HealthPartners, both of which have been around for decades.

Group Health’s success is largely the result of being a community-based integrated care model that is governed by a board elected by patients, said spokesperson Mike Foley.

“We strongly believe that community-based solutions are more likely to be successful because of the relationships they have with local doctors and the kind of care that is aligned with existing community resources and culture,” he said.

With healthcare evolving in different ways across the country, it’s hard to imagine applying a “cookie-cutter” approach for these complex organizations, Foley said.

While there’s little detail to date, he noted that a policy in which the government provides seed money for communities to create their own non-profit co-op may be feasible.

If healthcare reform efforts in Washington adopt the market reforms advocated by America’s Health Insurance Plans (AHIP), which includes among other things guaranteed issue, any type of government-run plan isn’t necessary, argued Robert Zirkelbach, senior manager for AHIP.

“Health insurance co-ops exist today; why do we need government to create them?” he said. “Government doesn’t have the infrastructure to provide the services that health plans can provide today.”

If the co-op policy is set up only to dictate prices, Zirkelbach fears that, like the Medicare program, it would result in shifting the cost to the private markets, which would exacerbate the current cost-shifting problem.

There are other issues that need to be addressed, such as whether co-ops would be subject to the same taxes that health plans must pay, Zirkelbach said.

“We’re trying to solve a perceived problem – a lack of access to insurance,” said John Bigalke, health plans leader for the Deloitte Center for Health Solutions. “The co-op model is a middle-of-the-road compromise.”

That said, creating a co-op from scratch is “a very big undertaking,” involving building the sales force, technology and actuarial expertise, as well as start-up costs, Bigalke said. With the focus on taking cost out of the system, a government-sponsored model that provides subsidies and would have to absorb underwriting losses would not be palatable, he said.

There are other ways to address the uninsured and access issues, such as the creation of state health insurance exchange and more affordable products, without creating new federal entities, he said.
Ultimately, the idea is to remove obstacles to make products affordable and accessible, Bigalke said.