MINNEAPOLIS, Minn (Reuters) - Bethany Whitehead is aware of the contentious national debate about U.S. healthcare reform, but the young Minnesotan has solved her own problems -- by joining a healthcare cooperative.
Last year, the 33-year-old art museum employee struggled to pay $200 in monthly premiums for her employer-sponsored insurance. Then she joined her husband in HealthPartners, a Minnesota-based co-op with more than 1.2 million members.
The couple now pay only $80 a month for joint coverage and receive better care, Whitehead said.
"It's a wonderful way to go," she said of the cooperative that emails her lab results and operates a women's specialty clinic near her home.
Such cooperatives may play a key role in legislation being hammered out in Congress. Earlier this month, Health and Human Services Secretary Kathleen Sebelius said the administration would consider creating not-for-profit insurance cooperatives as part of a sweeping reform package that President Barack Obama has declared his top priority.
Obama has said reform should drive down healthcare costs, provide insurance for the 46 million Americans who currently lack coverage and not add to the U.S. budget deficit.
He and most Democrats want reform to include a federal government-run health insurance plan to compete with big private insurers. But Republicans say this so-called "public option" is a road to European-style socialized medicine.
Cooperatives established and governed by members as nonprofit organizations already provide many Americans with phone, electricity and other services and credit union loans.
In healthcare, lawmakers have been looking at the Group Health Cooperative in Washington state and its 550,000 members, along with HealthPartners as well-established models of successful competition with private insurers.
But co-ops are unlikely to provide more than a partial solution to the problem of the uninsured because of their cost and questions about how fast they could become competitive.
"These are not easy to form. It takes many years to develop them to a size that would make them worthwhile," said William Peck, a physician and director of the Center for Health Policy at Washington University.
Many Democrats fear that even with government backing, co-ops would still fail to cover enough people and would lack the clout to drive down costs.
"On an individual basis, cooperatives have a lot of merit. But as a systemic solution, they aren't likely to produce much improvement very quickly," said Yale University political scientist Jacob Hacker, an advocate of the public option. "We definitely need big game changers in health care."
Many Republicans see government-backed cooperatives as little better than the public option. Sen. John McCain, last year's Republican presidential nominee, recently called them a "back door" to government-run healthcare.
But far from the political wrangling, interest in the cooperative model continues to grow. In Minneapolis, the 52-year-old HealthPartners added 80,000 new members last year on top of 35,000 new members in 2007 and is considered the country's largest member-governed, non-profit health organization, said Chief Executive Mary Brainerd.
The group, which technically is a non-profit instead of a co-op due to state statutes, operates on the cooperative model with members setting governing policies, and profits poured back into the organization.
HealthPartners offers open access to a network of more than 36,000 providers and 200 hospitals and has pay-for-performance plans for hospitals and doctors who meet quality goals. It offers classes to help people stop smoking and lose weight.
Administrative costs are 6 percent of revenues, compared to 10-20 percent, and sometimes higher, for some for-profit insurance companies.
"We've been able to do a pretty good job of managing costs for our membership," Brainerd said. "But it is not easy to build that overnight."
Washington lawmakers have said a new co-op would likely need about 500,000 members to have enough leverage to compete with other insurers. Start-up funds to support cooperatives have been estimated at $6 billion to cover about only about 12 million new members, according to congressional research.
Whitehead said she doesn't know the right answer to solving the healthcare crisis but the cooperative model works for her.
"I know plenty of people who don't have any health insurance at all and don't have any options and they just can't afford it," she said. "That's a horrible fear to have."
Editing by Alan Elsner and Eric Walsh