What exactly are 'health care cooperatives?'

What exactly are 'health care cooperatives?' »Play Video

OLYMPIA, Wash. - When Health and Human Services Secretary Kathleen Sebelius suggested the Obama administration might be open to health care cooperatives, some controversy ensued.

But how do these programs work, and how are they different than the health care many have now?

In co-ops, each patient is a member. Patients pool their money together to purchase health insurance and elect a board of trustees made up of patients to run the co-op.

Doctors from a cooperative called Group Health say it's a better system because primary care doctors and specialists are all under one roof.

"It is better than the current system,” said Dr. Clarisse Noel of Group Health. “There is less waste and more efficiency. There is better coordination of care between physicians in different departments and specialties."

One plan being discussed nationally calls for $3 billion to $4 billion in federal funds to help start health care co-ops in all 50 states. They would be required to keep certain amounts of financial reserves to handle unexpectedly high claims.

An established co-op, like Group Health, serving more than a half-million people has those funds, but critics worry some startup co-ops would fail for lack of funding.

Others argue co-ops could not compete against mega-insurance companies the way a government-run plan could, and they would do little to help the 50 million uninsured people in our country get insurance.

Still for those, like Randy Taylor, who is a member of the Group Health cooperative, says bringing health co-ops nationwide beats the idea of government-run health care.

"Everything you need is in one place. It's a perfect way to do it. I think they have the right idea, and I wish it was spread all over the country."

There are a few things to think about co-ops, however. Patients have to spend money and pay premiums to join, and they sometimes don’t take everyone because of pre-existing conditions.