Portrait of a Co-op: Is Group Health the Future?


As President Barack Obama's health care reform plan debate continues, the concept of health cooperatives or health co-ops is front and center.

Whether or not a government-run public option is introduced to create more competition with various private insurers, some in Congress think private-sector insurance co-ops can also provide competition, in turn slowing the rise of medical costs.

Based in Seattle, Group Health provides medical insurance and health care to more than 580,000 patients in Washington state and Idaho.

Group Health grew out of Group Health Cooperative, which began in 1947 as a community coalition and is now a subsidiary of Group Health. Here are some basics on this high profile co-op:

Why it is a called a cooperative: Group Health is run by an 11-person board of health-plan members elected by other members.

Major Group Health accounts: Boeing (Stock Quote: BA), Macy's (Stock Quote: M), Microsoft (Stock Quote: MSFT), United Airlines (Stock Quote: UAUA)

How Group Health doctors are paid: Doctors are paid an annual salary, not a fee per procedure or per service. Bonuses are offered for top quality care providers.

What Group Health does with its money: As a not-for-profit, the co-op reinvests the money it takes in, 2007 revenues were $2.7 billion, to lower costs and expand services.

Advantages: Use of electronic medical records, primary care givers collaborate when caring for patients.

Drawbacks: Experts estimate a minimum of 500,000 patients must enroll in co-ops for them to be competitive.

Not all are convinced that the key to increased competition is the co-op structure.

"In the end, it's not about who owns the place," Carolyn Watts, a health economist at the University of Washington recently told the New York Times. "It's about the incentives."

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