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Voluntary Health Insurance on the National Scene

Group Health Cooperatives

A paper resented before the Medical Care Section of the American Public Health Association at the Seventy­ seventh Annual Meeting in New York, N. Y., October 26, 1949 by JERRY VOORHIS, Executive Secretary, Cooperative Health Federation of America, Chicago, Ill.

There are many shapes and sizes in the United States. They range all the way from the Health Insurance Plan of Greater New York with more than 220,000 subscriber-members and hundreds of participating physicians, to the new cooperative hospital at Karnes City, Tex., which has just succeeded in engaging the first two doctors who will come to practice there. Some of the group health organizations like Group Health Association of Washington, D. C., Group Health Cooperative of Puget Sound, Labor Health Institute of St. Louis, and most of the rural co-operative hospital offer comprehensive care and service to their members. Others, such as Union Health Center of New York, provide diagnostic and ambulatory treatment. Still others like Group Health Insurance of New York and Group Health Mutual of St. Paul, are insurance plans. Some are sponsored by labor unions, some by farm organizations, some are without organized sponsorship. They differ in the extent to which they apply all the cooperative principles in their organization.

Yet certain characteristics are com­mon to all these group health plans. They represent the natural reaction of groups of American citizens to their own needs, to the progress of medical science, and to the thinking of leaders in the field of health-care. The old idea was for the medical profession to rely upon there being enough sick well­ to-do people in any given community to provide an income such as this pro­fession deserves. But in many a com­munity there are not very many well­ to-do people. Both these communities and the medical profession have suffered in consequence. Furthermore, the old idea was that each community must wait for a bequest from some wealthy person before it could have even the most necessary of health facilities.

Our present thinking on the problem of health is a far cry from these older conceptions. A wide variety of methods, most of them constructive, have been and are being applied to change and improve the situation; and more such methods are proposed.

In many respects the most direct answer of all is found in the formation of a group health cooperative or similar type of group health association. Such an organization represents the practical realization on the part of its members that they cannot safely rely either for the presence of doctors among them or for adequate health facilities upon the fortuitous illness and generosity of well­ to-do people. Instead the potential need for health care on the part of an entire group of people is pooled, together with monthly payments to cover the esti­mated cost of such care. In other words, the principle of pre­payment, which everyone agrees is the central answer to the problem of en­abling people generally to pay for ade­quate health care, is applied.

In the case of a group health plan this is done, of course, voluntarily by a group of people who have both the will and the ability to solve their own health problem. To what extent such voluntary action can be depended upon to meet the entire health problem of the nation is another question–and one with which this paper does not presume to deal. It is, however, evident that whenever a group does act volun­tarily on its own behalf certain social values are created even beyond the health benefits involved.

The very essence of the work of  the American Public Health Association is the prevention of disease. It has ren­dered and is rendering an immeasurable public service in this most essential field of social welfare. Group health co­-operatives support with vigor and sin­cerity the great work of the A.P.H.A. and its members; but the group health associations go a step further. They recognize that prevention of disease is only possible if the doctor has a chance to prevent it. They recognize that this requires that the doctor see well people occasionally in order to keep them well. And they know from experience that few people will give their doctor a chance to see them at regular intervals unless they have already prepaid the cost of comprehensive care through a group health plan. So the second char­acteristic of the democratic group health organizations is their emphasis on pre­ventive medical care.

One of the greatest fields of progress in medical science in recent years has been that of specialization. Whatever particular ailment anyone may have, there are doctors somewhere who are specially equipped by knowledge and skill to treat it. But it is perfectly obvi­ous that the specialist must have a much larger group of potential patients within range of his practice than the general practitioner needs. Therefore, specialists tend to be drawn always to the larger cities. Furthermore, since for good and sufficient reason, their services are expensive they must minister largely to the well-to-do, unless, indeed, groups of people can organize their need for the services of specialists in such a way as to assure them of constant practice for members of that group. This is perhaps one of the strongest and most impelling reasons why voluntary co­-operative group action is a necessary part of the solution of the nation’s health problem. Group practice by a number of physicians, including both general practitioners and specialists, be­comes possible wherever a sufficient number of families are brought together in a prepayment health plan. Only un­der such circumstances does medical specialization have a real chance to bring to the people the full benefits of which it is capable. And this function — that of encouraging and, bringing about effective group practice —- is, so far as I can see, one which even the benefits of a national insurance program will not affect. Regardless of the prog­ress of national legislation it will remain the responsibility and opportunity of group health coooperatives and similar group health plans to demonstrate the benefits of group practice and to bring it into being. This, therefore, is the third principle upon which group health cooperation, in its broad sense, is based.

The fourth reason for group health plans is a typically American one. Through them the people can act on their own behalf, and can attack their own problems by their own efforts, pro­vided only that they are willing to pool together their common potential need and to prepay the cost thereof. If there is a danger to our democratic institu­tions today, it lies in the taking away from the people of opportunities to act in solving their own problems and being responsible for their own affairs. Not governmental action alone, but more especially private monopoly is responsi­ble for this. Therefore, if there be a democratic method of   attacking any problem — one which enables the people to assume direct responsibility for its solution —-it deserves every encourage­ment. It should not, certainly, be frus­trated by restrictive legislation, nor by discriminatory practices. Demonstra­tion by the people that they can suc­cessfully provide for the meeting of their own pressing needs is perhaps the most essential element in any truly demo­cratic society. Not alone for the sake of their own health, but also for the sake of the health of their national in­stitutions, therefore, group health asso­ciations take as their fourth major principle non-profit operation under consumer sponsorship and democratic control.

Yet since the particular consumers of medical care, who take the trouble to study their problem and to do something about it, are also the ones who naturally develop the deepest appreciation of the value of the doctors’ services, demo­cratic control does not mean interference with the practice of medicine by a lay group. I do not know of a single instance where such a thing has hap­pened in a group health cooperative. The statement of Basic Policy of the Cooperative Health Federation of America makes this very clear, in these words:

There must be no interference in the prac­tice of medicine by the lay board. The tradi­tional relationship of physician and patient must be preserved.   Pertinent statements to this effect shall be included in the by-laws of all member organizations.

Those of us who are associated with group health associations and co-opera­tives would be the last to claim that any one of our plans, or all of them put to­gether, embodies a complete answer to the very complex problem”of providing adequate health care to the people. In­stead we feel we are in the process of evolving methods whereby the essential practices of prepayment, preventive and comprehensive care, group practice, and consumer sponsorship can be brought together successfully from both the patients’ and the doctors’ point of view. Out of this major experimentation will come, we believe, long sought answers to the problem of meeting the great need of the people in a manner entirely con­ sistent with all that is best in the American tradition.

I cannot refrain from expressing the hope that both the more conservative wing of the American Medical Associa­tion and the more determined advocates of national health insurance will, with us, recognize that they, like us, do not have a complete answer to the very complex and many-sided problem of adequate health care for all the people. There are at present a score of group health organizations which are regular members of the Cooperative Health Federation of America. These range in membership all the way from 22o,ooo for the New York Health Insurance Plan to 200 for the smallest of the organizations. They differ widely in the type of service they provide, some being cash indemnity cooperative insurance companies, while others own hospitals and clinics and provide comprehensive service directly for their members. Some of the plans are located in large. cities; others, including most of the cooperative hospitals, are in the most sparsely settled areas of the Great Plains. The monthly dues or charges also differ widely, de­pending of course upon the number of exclusions irom service provided, the size of the community where the plan is located, and in a few cases, unfortu­nately, upon a wide differential between the charges made to members and the fees paid by non-member users of facilities or services.

The regular member plans of C.H.F.A. provide for the health care needs in one way or another of at least 500,000 indi­viduals.

In addition to the regular member plans, C.H.F.A. has another 20 associate members which include several group health cooperatives in various stages of organization.

It must be quickly added that by no means all of the group health organiza­tions of the country are members of the Cooperative Health Federation. Many of the cooperative hospitals of the Southwest are not yet members. Generally, the labor union health plans are not members. So that the total num­ber of persons, all or part of whose medical care is provided as a result of their own effort and through organiza­tions substantially under their own con­trol, is probably several times the 500,000 figure just given.

For example, the Farm Credit Admin­istration reported in July, 1949, that there were 72 “rural cooperative health associations” either in operation, in process   of constructing facilities, in process of organization, or in an inactive status as of that date. The Department of Agriculture in testimony before a House Committee in June, 1949, divided “100 rural health cooperatives” which had up to that date been formed into the following classifications: 20 which had succeeded in providing or arranging for health service centers through which they offered prepaid services to their members; 23 which were either raising funds for construction or were in the process of constructing health service centers or hospitals; 8 which owned buildings but had no prepayment plans; 29 which were either inactive or dis­banded; and 20, concerning which cur­rent information was not available.

It is unfortunate that results of simi­lar studies regarding urban group health developments are not available. If they were I would guess that the record would be found to look not unlike that of the rural experiences.

The question may well be asked why, if group health cooperatives and similar consumer-sponsored health plans have proved so successful in certain instances and why, if they contain so great a po­tential for bringing about the most progressive of medical care practices, has their development not been more wide­ spread?

Consider for a moment some of the problems which must be solved if a co­operative healh plan providing direct service is to be successfully developed in a typical community. First, the pre­liminary steps must be taken in such a way that friction between various poten­tially interested groups in the commu­nity, some of them highly organized, will be avoided. Second, the correct approach must be made to the local doctors and it must be made at the very outset. Third, the campaign to enlist members and raise capital funds must be con­ducted in such a way that its goal is reached without leading prospective members to expect more benefits for their prepayment dollar than can in fact be furnished. Fourth, means must be found to provide the necessary physi­cal facilities, a task which in some com­munities is well-nigh impossible without some outside assistance. Fifth, there must be developed a clear-cut plan em­bodying the exact services and benefits which can· and will be furnished for a given schedule of monthly dues pay­ments. Sixth, right relationship must be established between the membership and the board, the board and the manager, the manager and the employees; and between all the laymen in their various capacities on the one hand, and the pro­fessional staff on the other. And there are even times when intra-staff relation­ships are hardly ideal. Seventh, the all important selection of the medical staff, especially the chief of staff, will largely determine the success or failure of the organization.

While these hurdles are being cleared the group may suddenly find either that their very constructive efforts are actu­ally in violation of state law or that their seventh problem has been rendered insoluble by the attitude of the state or local medical society.

There are state laws which make it either actually illegal or completely im­practical for a group of consumers of medical care to organize any sort of association to make such care available to themselves. These laws are on the statute books in more than a dozen states. In other states the absence of any sort of enabling legislation for group health cooperatives or associations, cou­ pled with common law barriers against what is mistakenly termed “contract medicine,” operate with virtually the same result. In every state, such en­ abling legislation should be passed as was enacted in Wisconsin in 1947, with the support, incidentally, of the state medical association.

The second major barrier to the de­velopment of group health associations is discrimination against doctors asso­ciating themselves therewith. Many a group which was well organized, had its capital funds practically raised, and thought itself ready to start providing health services to its members, has been discouraged to the point of dissolution by its inability to secure the services of doctors. True enough, in many such cases, the wrong approach, or what is worse, no approach at all, has been made to the local medical society. Yet even where this has not been the case, doctor after doctor has been frightened away by advice to the effect that his practice
with a group health association would not be recognized as proper by the state or county medical society, that he need not expect consideration for membership in these societies and that his profes­sional standing would be endangered. Cases of this kind have no reference whatsoever to the professional ability or ethical standards of the doctors in­volved. Indeed, if any potential patients in this whole country are insistent on the very best of professional qualifica­tions and the highest of ethical standards in their doctors, it is the potential pa­tients who are members of group health associations and cooperatives. But we are confronted with such instances of discrimination as the refusal of a county medical society to admit to membership the doctors on the staff of a group health cooperative despite the fact that as part of their practice these same doc­tors staff the hospital of the cooperative which has been approved by the Ameri­can Medical Association

Over the past year and a half negotia­tions have been carried on in a spirit of great mutual respect between a commit­tee of the American Medical Association and a committee representing organiza­tions of consumers of medical care, look­ing toward elimination of barriers of legislation and discrimination against group health plans. The principal re­sult to date of such negotiations has been the passage by the House of Delegates of the A.M.A. at its last meeting in At­lantic City of an agreed set of 20 princi­ples or standards for group health plans including cooperative and other con­sumer-sponsored plans. We believe these 20 principles will provide no higher standards than those set forth in our own Statement of Basic Policy which the C.H.F.A. itself prepared some time ago as a guide to the practices of its mem­bers. Yet it was highly encouraging to have the A.M.A. give official recognition to the fact that lay-sponsored plans can, without question, be operated in such fashion that they would merit full ap­proval by organized medicine. It, how­ever, was much less encouraging to have the resolution so framed that such a stamp of approval will be given only on condition that the state and local medi­cal societies have first given their en­dorsement to the plans in question. And some, though by no means all, of those state and local societies are the very organizations which have employed the discriminating tactics which we are try­ing to bring to an end.

So fundamental is the motivation of group health cooperatives and similar group health plans and, under every circumstance, so essential is their con­tribution to the overall solution of the nation’s health problem, that there can be little doubt of their growth and ex­pansion. They express the basic scien­tific attitude toward any great problem–that of experimentation with one method of organization after another until one is evolved which fits each given situation. The cooperative hospitals which have made hospital care for the first time available to the people of multiple-county areas in the Great Plains represent one contribution. The cooperative clinics serving thousands of city people and reaching out with affili­ated branch clinics into rural areas such as we find in Seattle represent another. The health centers for labor union members, like those of the United Mine Workers, International Ladies Garment Workers’ Union, and Labor Health Institute of St. Louis represent a third method. Cooperative health insurance plans, particularly those like Group Health Mutual of St. Paul and Group Health Insurance of New York City, where the insured are themselves members of credit unions, labor unions or other membership organizations and where the policy-holder members really control, constitute a fourth approach.

The basic objectives, however, are the same. They are set forth in the State­ment of Basic Policy of the Cooperative Health Federation in these words:

Its aim is to provide a more effective ap­proach to the organization of medical care by combining a method of prepayment with a method of group practice and by combining preventive services with curative services. Such a policy is necessary in order that ade­quate medical care may be rendered at reasonable cost. The Cooperative Health Federation of America does not presume to alter the valid science and art of the practice of medicine nor does it attempt to change the basic ethics of the medical profession.

Reprinted from AMERICAN JOURNAL OF PUBLIC HEALTH, Vol. 40, No. 3, March 1950

Source: University of Minnesota, Twin Cities, Social Welfare History Archives. Minneapolis, MN







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