One of the casualties of the recent budget deal is a potential game-changer in health care: nonprofit health insurance cooperatives (co-ops). Although not eliminated, the funding to help launch the co-ops was cut significantly. Let's set aside the fact that the "savings" from the $2.2 billion cut to the co-ops is budgetary sleight of hand, since the start-up funding to co-ops is in the form of loans which must be repaid in full. The unfortunate consequence of this ill-advised cut is that these incubators of innovative health care practice — which in many states will be the sole consumer-oriented competitors to the offerings of the big insurance companies — will be limited in number rather than exist nationwide, as originally envisioned by the sponsor of the co-op initiative, North Dakota Democratic Sen. Kent Conrad.
Why the need for co-ops? While the Obama health reform bill will significantly improve access to care for many and implement health insurance reforms that will benefit all Americans, health insurance could remain unaffordable for millions of working-class families. Far too many of these families will pay premiums, co-pays and deductibles that will amount to more than 10 percent of their take-home pay.
To make matters worse, with the mandate to buy insurance, if these families do not purchase coverage, they will be fined more than $2,000 on their taxes. Thus, many working-class families will have to either scrape together enough to buy insurance, heavily stressing or breaking the family budget, or forgo purchasing insurance and be fined a hefty sum — yet still remain uninsured.
Since the mandate is necessary for the entire new reform to work, lower-cost alternatives must be made available to Americans in this income range. Co-ops are in the best position to carry out the innovations necessary to drastically improve health care quality and affordability — which were not adequately addressed in the president's health care reform. Such a plan must be based on three pillars. The first pillar is a primary care medical home, where the primary care provider coordinates all care of a given patient, knows all treatments and medications a patient is receiving (preferably through electronic medical records) and has an intimate knowledge of the patient's life circumstances. This allows for more personalized care of each patient, and reduces costs through coordination of care outside the medical home.
The second pillar is payment reform, specifically the elimination of the fee-for-service system, which provides a perverse incentive for providers and hospitals to order and perform more tests and more procedures because they are rewarded for it. A good alternative is to pay providers a salary and bundle payments to hospitals (where they are paid a set amount for caring for a patient with a given condition).
The third pillar is utilizing evidence-based prescriptions and medical practices. This doesn't mean taking away all decision-making authority from physicians. Rather, it means that the best science on what treatments are most effective and least expensive must be readily available, so that the patient receives affordable care of high quality. As more medical practices gain access to electronic medical records and the technology "cloud," this information will become much easier to obtain.
How might a model co-op plan be structured? The plan will deliver the bulk of its care in primary care medical homes: neighborhood offices staffed by "teamlets" of personnel including a primary care physician, a nurse, a health coach/social worker and a front-office clerk who is ideally a member of the community. Care will be organized around evidence-based formularies and practices wherever possible. This model will provide a convenient and comfortable place for patients to seek care, and the staff will be organized and incentivized to provide integrated and efficient care delivery, focusing on healthy outcomes for members (for which the entire team will be rewarded).
Specialists will also be salaried, and collaborative treatment options among plan physicians (such as real-time consults via Skype-like technology) will be utilized whenever possible, a practice that would otherwise be unpalatable to physicians paid on a fee-for-service basis. Hospitals with which the plan would contract would agree to bundled payments for most conditions and procedures.
Finally, personalized health coaches would be offered to all members of the plan to work in concert with their medical provider in developing a health action plan to help the member implement a healthier lifestyle.
By protecting the remaining funding for co-ops, Congress and the president can support the implementation of model plans, which can be incubators for change: Those that achieve healthier outcomes at lower costs can then be replicated, which will go a long way to making high-quality care affordable for all our citizens.
Dr. Peter Beilenson is the health officer of Howard County and the founder of a group looking into the feasibility of a nonprofit health insurance cooperative in Maryland. His email is email@example.com.