Are co-ops the answer to health care reform?

A North Dakota senator says nonprofit cooperatives may be the solution the country's health care problems.

Kent Conrad, D-N.D., has been pitching insurance cooperatives as a compromise plan that would help get the votes needed to pass health care reform. He says the bill is doomed if it includes the so-called public option, or government-run, plan.

Minnesota is one of a handful of places that already has health care co-ops. In a Fox News interview, Conrad explained that consumer-controlled cooperatives are a proven model that will have bipartisan support.

"It's not government-run and government controlled," he said. "It's membership-run and membership controlled. But it does provide a nonprofit competitor for the for-profit insurance companies."

Conrad's proposal would provide government startup money to create private, consumer-owned, non-profit entities that would be similar to the electric, telephone and farm cooperatives operating throughout the nation. They'd also look a lot like existing health-care co-ops, including Twin Cities-based HealthPartners.

Donna Zimmerman, a vice president at HealthPartners, says the most important aspect of any health care cooperative is its governing board, which exists to please members, not shareholders. In the case of HealthPartners, Zimmerman says 15 elected board members oversee every aspect of operations. She says much of the board's attention is aimed at increasing quality and lowering costs.

"Having a not-for-profit organization that's run by consumers means that everything you do is focused on meeting the needs of the members themselves, because they're actually running the organization," she said.

Cooperatives like HealthPartners also have member committees that review appeals when other members have been denied benefits. Zimmerman says the debate around health care co-ops is a positive step in the national discussion.

"We think that that governance model is really what's needed basically across the country," she said. "And that would create a great improvement over what we see today."

But there are still few details about how a nationwide co-op system would take shape if it's included in the federal legislation. Health insurance is currently regulated by state governments, and some supporters of the cooperative approach say that could cause problems.

Adam Schwartz of the Washington-based National Cooperative Business Association says he wants health care co-ops to be able to work together across state lines to have more buying power and to compete more effectively.

"Take, for instance, North Dakota," he said. "Just given the population of that state, it would be difficult for a new co-op to get to the size and scale to form an effective competitor, which is certainly one of the goals of health insurance reform."

Some critics argue that startup subsidies would make the co-ops just another form of government-run insurance. Former Minnesota Republican Sen. Dave Durenberger, who now heads the National Institute of Health Policy at the University of St. Thomas, says a nonprofit health plan is no more accountable than the for-profit plans.

"Nonprofits are basically nonprofits," he said. "They aren't owned by anybody. They have to provide community benefit in exchange for tax exemption. But they are owned. There's nobody to hold them accountable. You can't hold any of our nonprofit plans accountable."

Durenberger is opposed to the so-called public option and the use of cooperatives.

He says genuine reform will come only when the entire health insurance industry agrees to assume more risk and maximize benefits.