Ins and outs of insurance cooperatives

Bloomington-based HealthPartners suddenly found itself in the national spotlight last week, when debate over health care reform shifted from a public insurance option to member-owned insurance cooperatives. The 52-year-old insurer and medical provider -- Minnesota's third-largest health plan, with more than 1 million members -- is not technically a cooperative but is governed by a member-elected board of directors. CEO Mary Brainerd and board member Jack Gherty, the former head of agricultural cooperative Land O'Lakes, sat down with the Star Tribune to answer questions about the cooperative health care model.

Q What is an insurance co-op? Is HealthPartners an insurance co-op?

A Brainerd: In our state, a cooperative is a not-for-profit organization that is member governed. HealthPartners is considered a cooperative but it really isn't.

Gherty: A cooperative generally is a business organization that is member owned and its earnings are allocated back to the members.

Brainerd: Our earnings may benefit members in lower premiums over time. Our focus is not on achieving huge earnings. We put our earnings in buildings, programs, premiums.

Q Is the co-op concept preferable to the public, government-run insurance option?

A Brainerd: Cooperative models like ours represent a good set of values for American health care. It puts the members' interests first -- top quality health care at an affordable cost. But there's no simple answer to affordable health care.

Gherty: Why would you want a much broader public plan when the government hasn't fixed Medicare?

Brainerd: That goes hand-in-hand with health care reform. A government plan fixes access to health care but not affordability. We don't want to over-promise and under-deliver. The big issue is that Medicare is going broke. We need to do things about how you pay for health care.

Q Why all the national interest in the HealthPartners model?

A Brainerd: We're as close as any organization in the country to the definition of a co-operative. There are just a few places where that is true and we're one of them.

Gherty: To be successful, [a nonprofit insurer would] have to have the critical mass to compete with other insurers. HealthPartners as a nonprofit has that critical mass. The integrated nature of HealthPartners permits it to look at health care in a more holistic way.

Q How will the for-profit insurance industry respond?

A Brainerd: They will work as hard as possible to be competitive. There will be a lot of hard work to maintain market share. That's fine. We have darn good competitors.

Q Have you been able to keep costs under control?

A Brainerd: The real emphasis has been to make sure we keep administrative costs low. At 8.4 percent, we are among the lowest in the state.

Gherty: We don't have the conflict of being a public company and trying to optimize profitability.

Brainerd: When you are in the for-profit environment, you've got those relentless quarterly earnings' goals to achieve. As a nonprofit, we have a longer time frame to invest in prevention and health goals as a matter of reducing costs.

Q How active is your board?

A Brainerd: The board is quite active. I expect the board members to be advocates and represent the consumers and plan members. We always have contested elections. We have to tell board candidates that they have a 50-50 chance of being defeated. About 10 to 15 percent of our members vote. In the last election about 35,000 voted. The board is a representation of the population we serve. We work for a diverse board. There no special seat for someone. We have two physicians on the board. And I'm a non-voting board member.

Gherty: It's invigorating because a board committee gets together once a month to meet with members who might have concerns and we spend as much time as we want asking questions. That allows plan members to feel that they've been heard.

Brainerd: That allows board members to connect with members and their issues. A number of times board members have said there's a theme here, whether it's benefit design or contract language.

David Phelps • 612-673-7269