Medical co-ops seek savings through group health-insurance coverage

MCCLATCHY NEWSPAPERS

COLFAX, Wis. — Two years ago, sick of rising health-care premiums, Nancy Taylor tried to switch insurance carriers.

The dairy farmer from western Wisconsin found another insurer, but its policy had two big loopholes. It wouldn’t cover conditions affecting her breasts or uterus — a mammogram had once found a spot on her breast — and it wouldn’t cover ear, nose and throat conditions for her son, who wears a hearing aid. Says Taylor: “I looked at [the agent] and thought: ‘This isn’t insurance.’”

Instead, Taylor turned to a new organization — the Farmers’ Health Cooperative of Wisconsin. The policy was no cheaper, but it covered everything her family needed.

Co-ops such as the one Taylor found could prove pivotal as Congress moves into the next stage of debating health-care legislation. The leading Senate proposal, a Finance Committee bill the panel is expected to vote on this week, would rely on health-care co-ops, rather than the public insurance option favored by some Democrats, to create competition for private insurance companies.

Proponents say co-ops will offer lower premiums and help expand coverage without resorting to a government insurance plan. Skeptics doubt they can ever amass the size to compete with big insurance companies and negotiate favorable prices for medical care.

Co-ops are an old idea in agriculture. Many farmers join co-ops such as Land O’Lakes and Cenex Harvest States to get group discounts for seed and fertilizer and jointly market their milk and grain.

In the 1940s a few medical groups around the country began organizing the same way. These co-ops owned clinics and hospitals; members prepaid each month and got medical services when needed. Members served on the board and helped set benefits. If the co-op collected more in premiums than it paid in medical costs, premiums went down the next year.

Although these early groups were cooperative in spirit, they weren’t legally co-ops, so they registered as nonprofits to comply with state laws. Today, just a handful remain, including Group Health of Puget Sound in Seattle and Group Health Cooperative of South Central Wisconsin.

In 2003, worried about the high number of farmers who were uninsured or underinsured, the Wisconsin Legislature unanimously passed the Co-op Care law, allowing individuals and small employers to form pools to buy insurance.

The new co-ops don’t own clinics or hospitals. They exist solely to create a critical mass of members to gain market leverage and buy group coverage through insurance companies.

The Farmer’s Health Cooperative, which contracts with Aetna, is the biggest, with 2,600 members. Anyone who gets at least 66 percent of their income from farming can join. Eight percent of members previously had no insurance at all.

Another group, Cooperative Health Choices of Western Wisconsin, isn’t even up, yet more than 300 entities — manufacturers, legal offices, a hospital, even a couple of golf courses — have applied to join. The co-op expects to get up and running Nov. 1.