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Cooperatives Emerge as Focal Point of Health Debate

August 17, 2009 at 12:00 AM EDT
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With the Obama administration signaling a new openness to dropping a public insurance option from any health care overhaul, the focus now turns toward the efficacy of the cooperative insurance model.

To help us understand more about some of the options being considered, how they might work and where they stand in Congress, we turn to Ceci Connolly, national health policy correspondent for the Washington Post, and Susan Dentzer, the editor-in-chief of the journal Health Affairs. She’s also a health analyst for the NewsHour.

Ladies, welcome. Reality check time. How much is the public option, Ceci, really fading? And how much is this co-op idea gathering force?

CECI CONNOLLY, The Washington Post: The public option has been fading a little bit for quite some time now. The dynamic is over in the Senate Finance Committee, as Judy and you talked about. There are not the votes in the Senate for what’s called a robust government option.

So they have been looking at this co-op idea for quite some time. But it’s not entirely clear that they have the votes for that, either, so it’s very much a work in progress.

GWEN IFILL: Help describe a little bit more than we have so far what co-ops are and what the distinction is between what they’re proposing and what a publicly funded or publicly backed option would be.

SUSAN DENTZER, editor, Health Affairs: Well, the main definition of a co-op at the moment seems to be that it’s not a public plan and it’s not private health insurance. It’s a Goldilocks “something in between.”

As Senator Conrad says, they’re sort of casting about to models in the landscape that might give us some sense of what these would look like. One is the Group Health model in Washington state and northern Idaho, which is, in health policy-ese, called an “integrated delivery system.”

It’s where the insurance function is all wrapped up with the doctors, the hospital group, Health owns its own medical facilities, and you sign up. It’s a consumer co-op. It’s governed by a board of consumers, elected trustees who are consumers, who decide the policy.

And in effect, what you do is you sign up and you become a part of this organization, not unlike the way many people sign up and become a member of, say, Kaiser Permanente or Geisinger, other integrated delivery systems around the country. So that’s one potential model.

GWEN IFILL: But how do you make a model like that work? Or do we know whether a model like that can work on a national scale?

SUSAN DENTZER: Well, this is the big question, because a lot of these things have come about over time. Group Health has been around since 1947, so how you jump-start something that doesn’t exist today becomes a really large question.

The other model is really to strip away the health care piece and talk about an insurance co-op. And this gets more along the lines of — many of our viewers will know mutual insurance companies, which were owned by policyholders.

It would be that same kind of model, where, in essence, the policy owners would own the policy. It wouldn’t have to pay a separate higher rate of return to shareholders or investors and it might — and would be very strictly regulated and, therefore, potentially, cost a lot less than private insurance.

Balancing risk

Ceci Connolly
Washington Post
What we're talking about is a good balance of young, healthy, old, sick -- you name it -- people brought into the pool so that you kind of share those costs around.

GWEN IFILL: So, Ceci, how would these plans or other ideas balance out risk -- the cost of insuring the sick versus insuring the healthy?

CECI CONNOLLY: Well, that's an important point to get to. And as we know, with the cooperative in Puget Sound, they've got in excess of 500,000, 600,000 members. That's very important, because you need that many people to come into your risk pool to sort of spread around the risk.

What we're talking about is a good balance of young, healthy, old, sick -- you name it -- people brought into the pool so that you kind of share those costs around.

You know, the other interesting thing about this, Gwen, is that there might be something cultural going on here with these. There might be certain parts of our country that are more accustomed to operating this way, like the idea of local consumers kind of organizing and running something that may not necessarily be as good a fit in other parts of the country.

GWEN IFILL: So when you hear comparisons to things like rural electrical co-ops or Land O' Lakes, it's not necessarily comparable to what it would take -- the complicated effort it would take to get health care equivalently for lots of people.

CECI CONNOLLY: Absolutely. It also requires doctors and nurses and other health care practitioners to work in a very different way than many of them now operate. Here in the Washington, D.C., region we have a lot of one and two and three docs kind of practicing on their own. These models tend to be the ones, as Susan said, integrated care, where they're really working as teams together.

GWEN IFILL: There's also a plan for health exchanges, which is floating around, hasn't gone very far, but pops up every now and then whenever it looks like public option is fading.

SUSAN DENTZER: Well, and that is a separate issue. It's really a question of, how are you going to organize purchasing pools so that people can buy coverage and have their risks, in effect, spread across a big pool? It's the same principle Ceci is talking about.

If I'm a person who gets my insurance through an employer, in effect, I have group coverage. If I'm a healthy person, the risks are pushed across the whole pool.

So the notion is to create new health insurance exchanges, or gateways, on a federal level or on the state level, or both -- in various bills, different approaches are spelled out -- and this would enable people who don't currently have coverage through an employer to access coverage through the pool.

There would be standardized benefit packages. You'd be able to comparison shop. I could buy the Aetna coverage package; I could buy the Blue Cross coverage package. And, of course, the old idea was that the public plan would also participate in that pool and be an option, and that, of course, is the option that seems to be fading now.

Political reality check

Susan Dentzer
Health Affairs
I think they see the prospect of this whole thing going down over the scare tactics, over some of the legitimate concerns about some of these provisions, and I think it's clear that they've heard the message, even from Democrats.

GWEN IFILL: Well, let's talk about the political reality check here, which is that, on the House side, there are, I guess, three House bills floating around out there. All of them include a public option, and most House Democrats support it.

On the Senate side, where this effort for bipartisanship has been going on for a month, there doesn't seem to be as bright a picture for the public option. When do those two things begin to clash?

CECI CONNOLLY: Well, they're certainly clashing behind the scenes. And the White House is looking much further down the road. The White House is still operating on the assumption that they get some version of that House bill passed on the House floor, a more liberal approach, that they'll have a Senate version, and that then everything really starts happening in this thing called the conference committee, when you've got to take the separate versions of the bills and hammer out all the deals.

And I know from talking to many people in the White House that that's sort of what they've got their eye on. They're already trying to think through to that.

But it's been a very bumpy summer for them. And I think maybe they need to sort of step back to the House and Senate action a little bit here before they get too far ahead of themselves.

GWEN IFILL: Is there any sign that all this -- the bumpiness that Ceci talks about has affected the administration's approach to health care overall, that what we saw over the weekend truly was a pullback, or was just playing for time?

SUSAN DENTZER: I think they're panicked. I think they see the prospect of this whole thing going down over the scare tactics, over some of the legitimate concerns about some of these provisions, and I think it's clear that they've heard the message, even from Democrats.

Let's keep in mind that the more conservative and moderate Democrats forced big changes in the public plan option in the House, and they also insisted that there not be a vote before August, because they know it's not going to come out of the Senate with a public plan. They don't want to go out there and hang themselves by voting for something that will never come about.

So I think they've heard enough that -- the administration has heard enough from even these moderate and conservative Democrats that this is not going to fly, you're terrorizing the country with this approach, and you've got to ease up and at least allow for the process to proceed.

GWEN IFILL: Do we know if they have embraced or are willing to embrace this co-op notion or if they have a better idea?

CECI CONNOLLY: The White House?

GWEN IFILL: The White House.

CECI CONNOLLY: I think the White House is quite open to the idea of a cooperative. Really, on some of these points of details, not to underestimate the importance of these elements, but, really, they're quite flexible on many of these details. What they want is they want a bill.

GWEN IFILL: And you're hearing flexibility, as well, Susan?

SUSAN DENTZER: Ditto. It's all up for negotiation.

GWEN IFILL: OK, Susan Dentzer and Ceci Connolly, thank you both very much.

SUSAN DENTZER: Thanks, Gwen.