Is Group Health a National Model?

Today's New York Times holds up Group Health as a possible compromise model between a single-payer government administered health care system and our current private health care system. A few weeks ago, the Wall Street Journal noted that Senator Kent Conrad (D-ND) has been advocating for a regionally based system of nonprofit health insurance co-ops - modeled on organizations like Group Health. Some benefits of the Group Health system include: 1) Its physicians are awarded bonuses for consulting by email and telephone (more efficient than in-person visits but unrenumerated by health insurance); 2) Medical practices are driven by Group Health’s own research into which drugs and procedures are most effective (rather than by the financial incentives that drive some physician behavior) and 3) a consumerist ethos focusing on patients similar to that found at sterling institutions such as the Mayo Clinic.

Critics of the notion of replicating the "Group Health" model pose the following arguments: 1) Governance by consumers at Group Health has created generous insurance benefits but has not lowered costs (according to Mike Kreidler, formerly a Group Health optometrist and now Washington’s insurance commissioner); and 2) Group Health Model will not scale, because "cooperatives will become dumping grounds for the sickest patients, and that they will have difficulty forming networks of physicians".

The Group Health Model does partially address what the Economist recently pointed to as the two biggest distortions in U.S. heathcare that causes it to be so expensive and inefficient: 1) Employer-provided healthcare packages are tax-deductible and 2) Most doctors in the U.S. work on a fee per procedure basis: "the more pills they prescribe, or tests they order, or procedures they perform, the more money they get—even though there is abundant clinical evidence that more spending does not reliably lead to better outcomes".