Cooperatives in Health Care: Breaking Bread or just making a mess?

Bob Laszewski had a recent post about forming health plan cooperatives as an alternative to both private insurance plans and Obama's Public Plan. State employee plans have been cited as an example of public entities that can create their own health plans for their workers. However, I don't see that parallel. When I think of a cooperative, I think of food stores or REI where everyone is a shareholder and has ownership. They pay for that ownership by either volunteering or with REI buying cool new outdoor equipment and are rewarded with dividends or other membership privileges. The state insurance plans are basically the same as any employer insurance plan in structure. The only difference is the mission where state will promote new and innovative designs, like Oregon's state plan, and prioritize quality and care as much as costs.

The cooperative model does interest me as I came a food cooperative veteran at my undergrad through 2 housing co-ops that the university supported. For $100/month, cooking once per week, and one house chore such as food shopping or cleaning the fridge, I enjoyed a huge kitchen, organic food, bulk food purchases, and home-cooked meals. This was a fraction of the costs of the school cafeteria and I also learned how to cook.

The 2 cooperatives were very different in culture and success. The first one that I was a part of was younger, messier, chores didn't get done, there was some freeloading, and some conflict. The 2nd one was older and ran quite smoothly. Chores were done and the when they weren't done, the co-op leadership made sure they were. Picture Rahm Emanuel with a beard, tie dye shirt, and soft voice asking you why the fridge wasn't getting cleaned.

However, both cooperatives had excellent parties. Ask me about the naked parties at the second one. This experience led me to thinking about the ingredients of a successful health plan cooperative.

• There would have to be a culture of accountability and stewardship. Just because it has a different mission than a private business, it is not exempt from good management. The 2nd cooperative taught me that managers can be very effective even if they were overalls and are usually barefoot.
• It has to be focused on the business goals and not get distracted. At the 2nd coop, a member introduced a proposal to support union advocacy groups by donating food and allowing them to use our kitchen to make baked goods for fund raising. We debated about whether we should use our resources to support the social good before deciding that our mission was to provide a cooperative living environment. We were not going to promote social causes. Likewise a health plan cooperative would need to be focused on providing health insurance and benefits. Any role in health policy or reform would be as a health plan and not a policy group. Focus would be on its insured members not solving the issue of the uninsured. Many hospital-sponsored health plans failed because they focused on being a health plan that providers liked rather than being a health plan that the market would support.
  
• The cooperative membership has to be engaged and focused. When food is involved, it's easy to get someone's attention. However, engagement with health plans is trickier. It would very powerful if members really felt more accountable for their behavior and health decisions. If the cooperative membership knew that they would receive money back if their health care costs were below target, perhaps they would be more inspired to improve their health. There could be peer pressure to reduce "freeloading" or someone not doing their part to improve their health.
  

The 3rd bullet point has the greatest potential and power with a health plan cooperative. Otherwise, it's just a variation of an organizational design. Being a non-profit is not a business strategy, just a tax structure and different way to incorporate an organization. My non-profit health plan acts very much like a for profit with its business planning. The first 2 bullet points really indicate that even a housing cooperative predominantly filled with hippies, socialists, and those who believe clothing really is optional needs good management to run effectively. The power of engaged membership is what would differentiate a health plan cooperative from other plans.