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In the interest of better understanding Group Health Cooperative (GHC), I’ve contacted the Group Health Center for Health Studies to ask about their co-op’s experience and what it tells them about the prospects for cooperative-based health care reform.

I first spoke with executive director Dr. Eric Larson, who has been the center’s executive director since 2002. Larson referred me to senior researcher Michael Von Korff, who has been studying health services and economics with the center since 1983.

Larson described the center as a non-proprietary public interest research group inside GHC. It develops “open source” research, which is supported by a variety of organizations, including the National Institutes of Health, Centers for Disease Control and Prevention, and Food and Drug Administration. About 93% of its funding comes from outside of Group Health. The center is guided by an advisory board appointed by GHC’s president; roughly half of the board’s members are from outside the co-op and related organizations.

Not wanting to beat around the bush, I asked Larson what he would say to those who dismiss their research, such as the recently announced “Medical Home” study, which established that GHC is continuing to make cost improvements, as propaganda for the cooperative. “It’s terrible nonsense,” he said. “I do research because I want to discover things…Group Health is happy to have us, but sees this as a public contribution and not research and development.”  

Larson reports that the Medical Home study was paid for with discretionary funds. It examined a pilot project through changes over a three year period, and compared its results with the other clinics in the system. This study does not directly compare GHC’s cost and quality with similar competitors, but it is a part of a long-standing pattern of Group Health leading the industry in its markets. During the 1970s Group Health was providing a dramatically better level of care, but Larson acknowledged “the rest of the world has caught up with that.”

He could not predict whether GHC could be reproduced on a national scale, but suggested that there might be some “diseconomies” related to size. “A co-op is a local phenomenon,” he said. “It has legs. I just don’t know what it would look like.”

Asked about any savings from a co-op over a public plan, he said it depends how it is set up. “It could be more cost effective,” he said, pointing to the inflationary potential of having policy set through government processes.

Another model that has sparked interest in recent years is the “Accountable Care Organization” (ACO), which is a group of providers who take overall responsibility for the health of a group of patients. An ACO can sign contracts with the government to take Medicare patients at a flat rate. If they provide good care at a savings, they keep most of the savings. This sort of arrangement could be used in the event that a co-op plan is implemented, and Larson would envision such patients as full-fledged members of a cooperative.

“It’s perfectly compatible,” he said. “In some ways, Elliot Fisher (one of the ACO concept’s originators) was thinking about organizations like ours, and how you transplant us into a community without something like Group Health.”

Von Korff describes GHC’s role as being a leader in delivering quality care at lower costs, by keeping people out of the hospital. Their once-radical practices have become commonplace, although not always done right. “Most companies have found out how to do a reasonably good job of (reducing hospitalization), sometimes in good ways, sometimes in bad.”

“We are in a low cost region, so our premiums are not appreciably lower than the competition,” he said. “Maybe part of the reason for low costs in this area is Group Health.”

Von Korff says that co-ops have “predilection to do the right thing.” But even if GHC’s presence is responsible for the Northwest’s lower costs, that is not necessarily because it is a cooperative. Other elements are in play. 

In addition to the savings of having an integrated health system, he sees having doctors on a salary as a major reason for low costs at GHC, because “their incentives are different” than doctors whose income is based on how many expensive procedures they complete.

When a patient visits multiple independent specialists, Von Korff says the problems can increase. “That person is going to get really bad care,” he said. “There’s no accountability for that kind of care.”

Von Korff is generally encouraged by the current debate on health care reform. “For the first time people are talking about the real issue, and the real issue is money,” he said. “Covering more people is important, but the barriers are all money.”

Von Korff thinks that the specifics of alternative plans are critically important, and even a single payer scenario might not address the cost issue. “Some people want to solve the problem with market forces. Others want to solve the problem with single payer. Both are a little simplistic,” he said. “The real question is how to structure health insurance so that it truly controls health care costs, minimizes administrative overhead and billing costs, reduces unnecessary care and price inflation, and revives the primary care sector.

So should a co-op wear the white hat in the market for health care?

“I don’t see any magic in the co-op structure that will necessarily solve these cost problems,” he said. “It could. It’s just about market power.”

Ultimately, the main issue for Von Korff is cost. “How do you create an organization with the best value?” he asked. “Group Health gets you part of the way there, but not all.”

He sees the single best idea from the Clinton reforms as a health care exchange, and is glad that idea is being considered. “Something like that needs to happen so small businesses can compete,” he said, noting that skyrocketing premiums following a large claim can be devastating to the bottom line.

“The action is around administrative costs and how much paper people are running around.” He suspects this could be 20-30% of total costs, but nobody really knows. “It’s a little bit of a head-scratcher, but it’s an awful lot of money.”

It has been claimed that 75% of people support a public health care plan over any alternative, including the creation of co-ops. The general implication seems to be that Congress should not be looking at other options due to the will of the majority. Further exploration of the co-op plan compromise is often dismissed as caving in to business interests, and those who support the co-op plan (or even further discussion of the plan) are sometimes regarded as medical industry stooges.

Here’s an especially shrill example from the Huffington Post: “There simply is no policy or political rationale to justify leaving a public plan option out of reform. Once that is made crystal clear, it will also be crystal clear the only reason to oppose it is sucking up to insurance and drug lobby campaign cash. Once that is obvious, it becomes much harder to resist the will of the people.”

Now, one doesn’t have to agree with my rationale – that the public plan seems fiscally unsustainable when we can’t even pay for Medicare in the long run, and that voluntary democratic systems like co-ops are the ideal way to handle difficult social and economic issues. But to deny its existence is obviously false, and it seems like an attempt to silence opposition.

In any case, it is far from clear how many people would still support a public plan after having the co-op concept explained to them. Many, certainly. Most, perhaps. All? Very unlikely.

To see how obsolete these polls are, let’s look at the questions:

The NBC/WSJ poll only gives two options. Question 34a essentially asks whether a “public plan” should be offered alongside a “private plan.” This is the only survey question where a number like 75% support appears (when the top two categories are added together into an aggregate “important” rating, based on 41% “extremely” and 35% “quite”).

The NYT/CBS poll is about the same. Question 68 asks whether respondents favor or oppose a “government administered health insurance plan” – compared to Medicare. This question got a 72% favorable rating, which can be considered roughly similar results for a roughly similar question.

From these data, we can safely conclude that somewhere around three out of four would prefer a public plan over the status quo, then and probably now. However, there are problems with how these polls are being used to attack the co-op plan.

The first problem is that co-ops were not even mentioned in the poll. These polls say nothing at all about public opinion on co-ops, or even on some generalized compromise proposal.

The second problem is that the co-op option essentially didn’t exist when the polls were taken (June 12-16). Conrad had floated the idea just before the surveys started, but it was a minor news story at the time, and the skeletal draft proposal was only leaked a couple of days after the surveys closed. So few if any people would have been aware of any compromise possibilities to the point that they might have had doubts that the public plan is the best solution to the status quo. Most people are unaware of the adaptability of cooperative business models, and that this might be a good alternative to a public plan.

An imperfect but useful analogy might be a hypothetical poll about Iran regarding whether the U.S. should invade or establish diplomatic relations, conducted just before the election. It was already limited by only providing two choices. Worse, events since then have greatly complicated the options while also obscuring the future conditions on which a decision must be made.

When we consider the huge uncertainties around the latest compromise proposal (including confusion over whether it is a co-op plan or public plan), it should be clear that  these polls do not say anything conclusive about how the public would judge a co-op plan today. We can certainly speculate how a multi-choice question might be answered (for example, I guess that the public plan would win a new poll, but by a modest plurality). But before we make any firm claims about what people actually believe about the co-op plan, we need to ask.

By Robert Scheer, Truthdig. Posted June 27, 2009.

Americans are now $14 trillion poorer. Many who thought they were middle class have now joined the ranks of the poor.

It’s not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust. The financial moguls, while tickled pink to have $1.25 trillion in toxic assets covered by the feds, along with hundreds of billions in direct handouts, are not using that money to turn around the free fall in housing foreclosures.

As The Wall Street Journal reported Tuesday, “The Mortgage Bankers Association cut its forecast of home-mortgage lending this year by 27% amid deflating hopes for a boom in refinancing.” The same association said that the total refinancing under the administration’s much ballyhooed Home Affordable Refinance Program is “very low.”

Aside from a tight mortgage market, the problem in preventing foreclosures has to do with homeowners losing their jobs. Here again the administration, continuing the Bush strategy, is working the wrong end of the problem. Although President Obama was wise enough to at least launch a job stimulus program, a far greater amount of federal funding benefits Wall Street as opposed to Main Street.

State and local governments have been forced into draconian budget cuts, firing workers who are among the most reliable in making their mortgage payments–when they have jobs. Yet the Obama administration won’t spend even a small fraction of what it has wasted on the banks to cover state shortfalls.

California couldn’t get the White House to guarantee $5.5 billion in short-term notes to avert severe cuts in state and local payrolls, from prison guards to schoolteachers. Compare that with the $50 billion already given to Citigroup, plus an astounding $300 billion to guarantee that institution’s toxic assets. Citigroup benefits from being a bank “too big to fail,” although through its irresponsible actions to get that large it did as much as any company to cause this mess.

How big a mess? According to the Federal Reserve’s most recent report, seven straight quarters of declining household wealth have left Americans $14 trillion poorer. Many who thought they were middle class have now joined the ranks of the poor. Food banks are strapped and welfare rolls are dramatically on the rise, as the WSJ reports, with a 27 percent year-to-year increase in Oregon, 23 percent in South Carolina and 10 percent in California. And you have to be very poor to get on welfare, thanks to President Clinton’s so-called welfare reform, which he signed into law before he ramped up the radical deregulation of the financial services industry, enabling our economic downturn.

Citigroup, the prime mover for ending the sensible restraints of the Glass-Steagall Act of 1933, is now a pathetic ward of the state. But back in the day President Clinton would tour the country with Citigroup founder Sandy Weill touting the wonderful work that Weill and other moguls were doing to invest in economically depressed communities. It wasn’t really happening then, and now millions of folks in those communities have seen their houses snatched from them as if they were just pieces in a game of Monopoly that Clinton and his fat-cat buddy were playing.

Once Weill got the radical deregulation law he wanted, he issued a statement giving credit: “In particular, we congratulate President Clinton, Treasury Secretary Larry Summers, NEC [National Economic Council] Chairman Gene Sperling, Under Secretary of the Treasury Gary Gensler, Assistant Treasury Secretaries Linda Robertson and Greg Baer.”

Summers is now Obama’s top economic adviser, Sperling has been appointed legal counselor at Treasury, and Gensler, a former partner in Goldman Sachs, is head of the Commodity Futures Trading Commission, which he once attempted to prevent from regulating derivatives when it was run by Brooksley Born. Robertson worked for Summers in pushing through the Commodity Futures Modernization Act, which freed the derivatives market from adult supervision and contained the “Enron Loophole,” permitting that company to go wild. Robertson then became the top Washington lobbyist for Enron and was recently appointed senior adviser to Fed Chair Ben S. Bernanke. Baer went to work as a corporate counsel for Bank of America, which announced his appointment with a press release crediting him with having “coordinated Treasury policy” during the Clinton years in getting Glass-Steagall repealed. As a result of deregulation, B of A too spiraled out of control and ended up as a beneficiary of the Treasury’s welfare program.

Why was I so naive as to have expected this Democratic president to not do the bidding of the banks when the last president from that party joined the Republicans in giving the moguls everything they wanted? Please, Obama, prove me wrong.

Robert Scheer is Editor in Chief of Truthdig and author of a new book, The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America.